After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Shopify Inc (NYSE:SHOP).
Shopify Inc (NYSE:SHOP) was in 91 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 90. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. SHOP investors should pay attention to an increase in hedge fund sentiment recently. There were 90 hedge funds in our database with SHOP positions at the end of the fourth quarter. Our calculations also showed that SHOP ranked 27th among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Daniel Sundheim of D1 Capital
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Do Hedge Funds Think SHOP Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 91 of the hedge funds tracked by Insider Monkey were long this stock, a change of 1% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SHOP over the last 23 quarters. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Lone Pine Capital has the most valuable position in Shopify Inc (NYSE:SHOP), worth close to $1.8949 billion, accounting for 6.9% of its total 13F portfolio. On Lone Pine Capital’s heels is ARK Investment Management, led by Catherine D. Wood, holding a $1.1879 billion position; the fund has 2.4% of its 13F portfolio invested in the stock. Some other peers that hold long positions contain Ken Griffin’s Citadel Investment Group, Christopher Lyle’s SCGE Management and Chase Coleman’s Tiger Global Management LLC. In terms of the portfolio weights assigned to each position Strategy Capital allocated the biggest weight to Shopify Inc (NYSE:SHOP), around 26.15% of its 13F portfolio. Himension Capital is also relatively very bullish on the stock, earmarking 13.61 percent of its 13F equity portfolio to SHOP.
With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Route One Investment Company, managed by William Duhamel, assembled the most valuable position in Shopify Inc (NYSE:SHOP). Route One Investment Company had $143.2 million invested in the company at the end of the quarter. Daniel Sundheim’s D1 Capital Partners also made a $136.7 million investment in the stock during the quarter. The other funds with brand new SHOP positions are Dan Loeb’s Third Point, Anand Desai’s Darsana Capital Partners, and Andreas Halvorsen’s Viking Global.
Let’s also examine hedge fund activity in other stocks similar to Shopify Inc (NYSE:SHOP). These stocks are Lowe’s Companies, Inc. (NYSE:LOW), Charter Communications, Inc. (NASDAQ:CHTR), JD.Com Inc (NASDAQ:JD), Royal Bank of Canada (NYSE:RY), Sony Corporation (NYSE:SNE), AstraZeneca plc (NASDAQ:AZN), and Starbucks Corporation (NASDAQ:SBUX). All of these stocks’ market caps are similar to SHOP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LOW | 61 | 5171876 | -10 |
| CHTR | 74 | 16399220 | -16 |
| JD | 75 | 11309916 | -14 |
| RY | 18 | 716039 | 0 |
| SNE | 27 | 541868 | -1 |
| AZN | 34 | 2660857 | -7 |
| SBUX | 61 | 4442448 | -6 |
| Average | 50 | 5891746 | -7.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 50 hedge funds with bullish positions and the average amount invested in these stocks was $5892 million. That figure was $9984 million in SHOP’s case. JD.Com Inc (NASDAQ:JD) is the most popular stock in this table. On the other hand Royal Bank of Canada (NYSE:RY) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Shopify Inc (NYSE:SHOP) is more popular among hedge funds. Our overall hedge fund sentiment score for SHOP is 86. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 17.2% in 2021 through June 11th but still managed to beat the market by 3.3 percentage points. Hedge funds were also right about betting on SHOP as the stock returned 12.7% since the end of March (through 6/11) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
