In this article we will check out the progression of hedge fund sentiment towards Godaddy Inc (NYSE:GDDY) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is GDDY a good stock to buy now? Godaddy Inc (NYSE:GDDY) has seen a decrease in hedge fund sentiment recently. Godaddy Inc (NYSE:GDDY) was in 44 hedge funds’ portfolios at the end of September. The all time high for this statistic is 55. There were 55 hedge funds in our database with GDDY holdings at the end of June. Our calculations also showed that GDDY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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David E. Shaw of D.E. Shaw
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Do Hedge Funds Think GDDY Is A Good Stock To Buy Now?
At third quarter’s end, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from one quarter earlier. On the other hand, there were a total of 51 hedge funds with a bullish position in GDDY a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Robert Joseph Caruso’s Select Equity Group has the biggest position in Godaddy Inc (NYSE:GDDY), worth close to $750.7 million, accounting for 3.7% of its total 13F portfolio. The second largest stake is held by Tim Hurd and Ed Magnus of BlueSpruce Investments, with a $436.1 million position; 10.2% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors that hold long positions consist of Renaissance Technologies, D. E. Shaw’s D E Shaw and Mitch Kuflik and Rob Sobel’s Brahman Capital. In terms of the portfolio weights assigned to each position Blacksheep Fund Management allocated the biggest weight to Godaddy Inc (NYSE:GDDY), around 15.04% of its 13F portfolio. Brahman Capital is also relatively very bullish on the stock, designating 14.8 percent of its 13F equity portfolio to GDDY.
Because Godaddy Inc (NYSE:GDDY) has faced declining sentiment from the smart money, it’s easy to see that there were a few funds who were dropping their entire stakes by the end of the third quarter. Interestingly, Robert Boucai’s Newbrook Capital Advisors cut the biggest stake of the “upper crust” of funds watched by Insider Monkey, valued at close to $121.3 million in stock, and Ricky Sandler’s Eminence Capital was right behind this move, as the fund cut about $99.7 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 11 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to Godaddy Inc (NYSE:GDDY). These stocks are FactSet Research Systems Inc. (NYSE:FDS), Celanese Corporation (NYSE:CE), Clarivate Plc (NYSE:CCC), Leidos Holdings Inc (NYSE:LDOS), Seagate Technology plc (NASDAQ:STX), Ulta Beauty, Inc. (NASDAQ:ULTA), and United Rentals, Inc. (NYSE:URI). This group of stocks’ market values are closest to GDDY’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FDS | 29 | 226885 | 8 |
| CE | 26 | 753664 | -7 |
| CCC | 37 | 1729517 | -8 |
| LDOS | 25 | 349419 | -10 |
| STX | 23 | 2074772 | -4 |
| ULTA | 31 | 1057970 | -7 |
| URI | 40 | 797846 | 0 |
| Average | 30.1 | 998582 | -4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.1 hedge funds with bullish positions and the average amount invested in these stocks was $999 million. That figure was $2416 million in GDDY’s case. United Rentals, Inc. (NYSE:URI) is the most popular stock in this table. On the other hand Seagate Technology plc (NASDAQ:STX) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Godaddy Inc (NYSE:GDDY) is more popular among hedge funds. Our overall hedge fund sentiment score for GDDY is 68. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 32.9% in 2020 through December 8th but still managed to beat the market by 16.2 percentage points. Hedge funds were also right about betting on GDDY as the stock returned 14.9% since the end of September (through 12/8) 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.
