Is FVRR Stock A Buy or Sell?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Fiverr International Ltd. (NYSE:FVRR) based on that data.

Is FVRR stock a buy? Fiverr International Ltd. (NYSE:FVRR) was in 29 hedge funds’ portfolios at the end of December. The all time high for this statistic is 30. FVRR shareholders have witnessed a decrease in enthusiasm from smart money in recent months. There were 30 hedge funds in our database with FVRR holdings at the end of September. Our calculations also showed that FVRR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 124 percentage points since March 2017 (see the details here).

Israel Englander of Millennium Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Keeping this in mind let’s take a peek at the fresh hedge fund action surrounding Fiverr International Ltd. (NYSE:FVRR).

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

Heading into the first quarter of 2021, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FVRR over the last 22 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

More specifically, SRS Investment Management was the largest shareholder of Fiverr International Ltd. (NYSE:FVRR), with a stake worth $219.7 million reported as of the end of December. Trailing SRS Investment Management was Renaissance Technologies, which amassed a stake valued at $105.1 million. Brightlight Capital, Millennium Management, and Candlestick Capital 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 Brightlight Capital allocated the biggest weight to Fiverr International Ltd. (NYSE:FVRR), around 16.19% of its 13F portfolio. Kent Lake Capital is also relatively very bullish on the stock, dishing out 4.62 percent of its 13F equity portfolio to FVRR.

Due to the fact that Fiverr International Ltd. (NYSE:FVRR) has faced declining sentiment from hedge fund managers, it’s safe to say that there exists a select few funds that decided to sell off their positions entirely last quarter. Interestingly, David Ma’s Composite Capital cut the biggest stake of the 750 funds watched by Insider Monkey, totaling about $107.5 million in stock, and James Crichton’s Hitchwood Capital Management was right behind this move, as the fund said goodbye to about $20.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Fiverr International Ltd. (NYSE:FVRR) but similarly valued. These stocks are iRhythm Technologies, Inc. (NASDAQ:IRTC), Q2 Holdings Inc (NYSE:QTWO), Twist Bioscience Corporation (NASDAQ:TWST), Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), Ares Management Corp (NYSE:ARES), United Therapeutics Corporation (NASDAQ:UTHR), and Santander Consumer USA Holdings Inc (NYSE:SC). This group of stocks’ market valuations resemble FVRR’s market valuation.

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As you can see these stocks had an average of 26.1 hedge funds with bullish positions and the average amount invested in these stocks was $1038 million. That figure was $529 million in FVRR’s case. Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is the most popular stock in this table. On the other hand iRhythm Technologies, Inc. (NASDAQ:IRTC) is the least popular one with only 19 bullish hedge fund positions. Fiverr International Ltd. (NYSE:FVRR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FVRR is 55.7. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on FVRR as the stock returned 16.2% since the end of Q4 (through 4/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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