Is LendingTree, Inc (TREE) Going to Burn These Hedge Funds?

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding LendingTree, Inc (NASDAQ:TREE).

Is LendingTree, Inc (NASDAQ:TREE) the right pick for your portfolio? The smart money was in a pessimistic mood. The number of long hedge fund bets retreated by 6 recently. LendingTree, Inc (NASDAQ:TREE) was in 24 hedge funds’ portfolios at the end of September. The all time high for this statistic is 30. Our calculations also showed that TREE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

David Siegel of Two Sigma Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to take a peek at the fresh hedge fund action encompassing LendingTree, Inc (NASDAQ:TREE).

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

At the end of September, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the second quarter of 2021. On the other hand, there were a total of 20 hedge funds with a bullish position in TREE a year ago. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Citadel Investment Group, managed by Ken Griffin, holds the largest position in LendingTree, Inc (NASDAQ:TREE). Citadel Investment Group has a $60 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $17.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions comprise Ken Griffin’s Citadel Investment Group, D. E. Shaw’s D E Shaw and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Voce Capital allocated the biggest weight to LendingTree, Inc (NASDAQ:TREE), around 1% of its 13F portfolio. Full18 Capital is also relatively very bullish on the stock, dishing out 0.7 percent of its 13F equity portfolio to TREE.

Because LendingTree, Inc (NASDAQ:TREE) has witnessed declining sentiment from the smart money, logic holds that there were a few money managers that slashed their full holdings last quarter. Interestingly, Alexander Mitchell’s Scopus Asset Management sold off the largest investment of all the hedgies followed by Insider Monkey, totaling an estimated $84.8 million in stock. Ken Griffin’s fund, Citadel Investment Group, also cut its stock, about $40.2 million worth. These transactions are important to note, as total hedge fund interest was cut by 6 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as LendingTree, Inc (NASDAQ:TREE) but similarly valued. We will take a look at Himax Technologies, Inc. (NASDAQ:HIMX), Frontline Ltd (NYSE:FRO), Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY), Proto Labs Inc (NYSE:PRLB), Service Properties Trust (NASDAQ:SVC), Alector, Inc. (NASDAQ:ALEC), and USANA Health Sciences, Inc. (NYSE:USNA). This group of stocks’ market valuations are closest to TREE’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $212 million. That figure was $161 million in TREE’s case. Dave & Buster’s Entertainment, Inc. (NASDAQ:PLAY) is the most popular stock in this table. On the other hand Frontline Ltd (NYSE:FRO) is the least popular one with only 8 bullish hedge fund positions. LendingTree, Inc (NASDAQ:TREE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TREE is 67.4. 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately TREE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TREE were disappointed as the stock returned -18.7% since the end of September (through 12/9) 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.

Suggested Articles:

• 15 Most Annoying Email Newsletters to Sign Horrible People Up to
• 10 Biggest Hedge Fund Failures
• 10 Best Automotive Stocks to Invest in Now

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

Follow Insider Monkey on Twitter