Here is What Hedge Funds Think About eBay Inc (EBAY)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 866 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article we look at what those investors think of eBay Inc (NASDAQ:EBAY).

Is eBay Inc (NASDAQ:EBAY) the right pick for your portfolio? Money managers were reducing their bets on the stock. The number of bullish hedge fund positions fell by 2 in recent months. eBay Inc (NASDAQ:EBAY) was in 51 hedge funds’ portfolios at the end of March. The all time high for this statistic is 83. Our calculations also showed that EBAY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 53 hedge funds in our database with EBAY positions at the end of the fourth quarter.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Seth Klarman of Baupost Group

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a gander at the new hedge fund action regarding eBay Inc (NASDAQ:EBAY).

Do Hedge Funds Think EBAY Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 51 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EBAY over the last 23 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

More specifically, Baupost Group was the largest shareholder of eBay Inc (NASDAQ:EBAY), with a stake worth $1122.2 million reported as of the end of March. Trailing Baupost Group was Ako Capital, which amassed a stake valued at $571.5 million. Rima Senvest Management, Lyrical Asset Management, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Rima Senvest Management allocated the biggest weight to eBay Inc (NASDAQ:EBAY), around 10.96% of its 13F portfolio. Baupost Group is also relatively very bullish on the stock, dishing out 8.94 percent of its 13F equity portfolio to EBAY.

Since eBay Inc (NASDAQ:EBAY) has faced declining sentiment from the smart money, it’s safe to say that there were a few funds who were dropping their entire stakes heading into Q2. Intriguingly, James Parsons’s Junto Capital Management cut the biggest stake of the “upper crust” of funds followed by Insider Monkey, totaling about $5.2 million in stock. Frank Fu’s fund, CaaS Capital, also dumped its stock, about $4.3 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds heading into Q2.

Let’s check out hedge fund activity in other stocks similar to eBay Inc (NASDAQ:EBAY). We will take a look at L3Harris Technologies, Inc. (NYSE:LHX), The Bank of New York Mellon Corporation (NYSE:BK), Cognizant Technology Solutions Corp (NASDAQ:CTSH), DuPont de Nemours Inc (NYSE:DD), Lloyds Banking Group PLC (NYSE:LYG), IHS Markit Ltd. (NYSE:INFO), and CrowdStrike Holdings, Inc. (NASDAQ:CRWD). This group of stocks’ market valuations resemble EBAY’s market valuation.

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As you can see these stocks had an average of 44 hedge funds with bullish positions and the average amount invested in these stocks was $2942 million. That figure was $3762 million in EBAY’s case. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is the most popular stock in this table. On the other hand Lloyds Banking Group PLC (NYSE:LYG) is the least popular one with only 5 bullish hedge fund positions. eBay Inc (NASDAQ:EBAY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EBAY is 53.4. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately EBAY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EBAY were disappointed as the stock returned 3.6% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.