Here is What Hedge Funds Think About Paypal Holdings Inc (PYPL)

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 Paypal Holdings Inc (NASDAQ:PYPL).

Is Paypal Holdings Inc (NASDAQ:PYPL) going to take off soon? Investors who are in the know were getting less bullish. The number of long hedge fund bets retreated by 4 lately. Paypal Holdings Inc (NASDAQ:PYPL) was in 143 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 150. Our calculations also showed that PYPL ranked 8th among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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.

Philippe Laffont of Coatue Management

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

At the end of March, a total of 143 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards PYPL over the last 23 quarters. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

More specifically, Fundsmith LLP was the largest shareholder of Paypal Holdings Inc (NASDAQ:PYPL), with a stake worth $2988.1 million reported as of the end of March. Trailing Fundsmith LLP was Fisher Asset Management, which amassed a stake valued at $2687 million. SB Management, Citadel Investment Group, and Coatue Management 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 Ogborne Capital allocated the biggest weight to Paypal Holdings Inc (NASDAQ:PYPL), around 16.08% of its 13F portfolio. Aravt Global is also relatively very bullish on the stock, dishing out 15.07 percent of its 13F equity portfolio to PYPL.

Judging by the fact that Paypal Holdings Inc (NASDAQ:PYPL) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there were a few funds who sold off their positions entirely by the end of the first quarter. It’s worth mentioning that Rajiv Jain’s GQG Partners said goodbye to the largest investment of all the hedgies watched by Insider Monkey, totaling close to $385.6 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its stock, about $141.3 million worth. These moves are important to note, as aggregate hedge fund interest fell by 4 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Paypal Holdings Inc (NASDAQ:PYPL) but similarly valued. We will take a look at Intel Corporation (NASDAQ:INTC), ASML Holding N.V. (NASDAQ:ASML), Comcast Corporation (NASDAQ:CMCSA), Verizon Communications Inc. (NYSE:VZ), Exxon Mobil Corporation (NYSE:XOM), Netflix, Inc. (NASDAQ:NFLX), and Adobe Inc. (NASDAQ:ADBE). This group of stocks’ market caps are similar to PYPL’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 79.6 hedge funds with bullish positions and the average amount invested in these stocks was $8804 million. That figure was $14717 million in PYPL’s case. Netflix, Inc. (NASDAQ:NFLX) is the most popular stock in this table. On the other hand ASML Holding N.V. (NASDAQ:ASML) is the least popular one with only 35 bullish hedge fund positions. Compared to these stocks Paypal Holdings Inc (NASDAQ:PYPL) is more popular among hedge funds. Our overall hedge fund sentiment score for PYPL is 95.1. 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 PYPL as the stock returned 11.8% 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.

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