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. Insider Monkey finished processing more than 730 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 28th, 2019. What do these smart investors think about Godaddy Inc (NYSE:GDDY)?
Godaddy Inc (NYSE:GDDY) has seen a decrease in hedge fund sentiment of late. Our calculations also showed that GDDY isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s analyze the new hedge fund action surrounding Godaddy Inc (NYSE:GDDY).
How have hedgies been trading Godaddy Inc (NYSE:GDDY)?
Heading into the third quarter of 2019, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. By comparison, 42 hedge funds held shares or bullish call options in GDDY a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Select Equity Group was the largest shareholder of Godaddy Inc (NYSE:GDDY), with a stake worth $443.7 million reported as of the end of March. Trailing Select Equity Group was Renaissance Technologies, which amassed a stake valued at $256.8 million. D E Shaw, 12 West Capital Management, and Egerton Capital Limited were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as Godaddy Inc (NYSE:GDDY) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there is a sect of fund managers that decided to sell off their entire stakes in the second quarter. It’s worth mentioning that David Gallo’s Valinor Management LLC said goodbye to the largest stake of the “upper crust” of funds tracked by Insider Monkey, valued at about $92.5 million in stock, and Bain Capital’s Brookside Capital was right behind this move, as the fund said goodbye to about $59.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 4 funds in the second quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Godaddy Inc (NYSE:GDDY) but similarly valued. These stocks are MarketAxess Holdings Inc. (NASDAQ:MKTX), Atmos Energy Corporation (NYSE:ATO), Kansas City Southern (NYSE:KSU), and Vornado Realty Trust (NYSE:VNO). This group of stocks’ market valuations match GDDY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MKTX | 18 | 365542 | 3 |
| ATO | 14 | 397907 | -6 |
| KSU | 26 | 370990 | 0 |
| VNO | 27 | 534294 | -3 |
| Average | 21.25 | 417183 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $417 million. That figure was $2554 million in GDDY’s case. Vornado Realty Trust (NYSE:VNO) is the most popular stock in this table. On the other hand Atmos Energy Corporation (NYSE:ATO) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Godaddy Inc (NYSE:GDDY) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately GDDY wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GDDY were disappointed as the stock returned -5.9% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
