Is Mercadolibre (MELI) Stock A Buy or Sell?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Mercadolibre Inc (NASDAQ:MELI).

Is MELI stock a buy or sell? Mercadolibre Inc (NASDAQ:MELI) has experienced a decrease in support from the world’s most elite money managers in recent months. Mercadolibre Inc (NASDAQ:MELI) was in 79 hedge funds’ portfolios at the end of December. The all time high for this statistic is 81. There were 81 hedge funds in our database with MELI holdings at the end of September. Our calculations also showed that MELI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In today’s marketplace there are a lot of methods stock traders employ to appraise publicly traded companies. Some of the best methods are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite fund managers can outpace their index-focused peers by a superb margin (see the details here).

Rajiv Jain of GQG Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best hydrogen fuel cell 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. 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 homepage (or at the end of this article). Keeping this in mind we’re going to analyze the latest hedge fund action encompassing Mercadolibre Inc (NASDAQ:MELI).

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

At the end of the fourth quarter, a total of 79 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MELI over the last 22 quarters. So, let’s find out 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, Rajiv Jain’s GQG Partners has the biggest position in Mercadolibre Inc (NASDAQ:MELI), worth close to $1.8153 billion, amounting to 6.2% of its total 13F portfolio. Sitting at the No. 2 spot is Lone Pine Capital, holding a $1.0003 billion position; 3.6% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism encompass Andreas Halvorsen’s Viking Global, Panayotis Takis Sparaggis’s Alkeon Capital Management and Alex Sacerdote’s Whale Rock Capital Management. In terms of the portfolio weights assigned to each position Anabranch Capital allocated the biggest weight to Mercadolibre Inc (NASDAQ:MELI), around 17.66% of its 13F portfolio. Kora Management is also relatively very bullish on the stock, dishing out 15.05 percent of its 13F equity portfolio to MELI.

Judging by the fact that Mercadolibre Inc (NASDAQ:MELI) has experienced bearish sentiment from hedge fund managers, logic holds that there were a few fund managers who were dropping their entire stakes heading into Q1. It’s worth mentioning that Ken Griffin’s Citadel Investment Group dumped the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling close to $73.6 million in stock. David Ma’s fund, Composite Capital, also cut its stock, about $46.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 2 funds heading into Q1.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Mercadolibre Inc (NASDAQ:MELI) but similarly valued. We will take a look at The TJX Companies, Inc. (NYSE:TJX), Anthem Inc (NYSE:ANTM), Snowflake Inc (NYSE:SNOW), S&P Global Inc. (NYSE:SPGI), Applied Materials, Inc. (NASDAQ:AMAT), Zoetis Inc (NYSE:ZTS), and Canadian National Railway Company (NYSE:CNI). All of these stocks’ market caps are similar to MELI’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 60 hedge funds with bullish positions and the average amount invested in these stocks was $3889 million. That figure was $8767 million in MELI’s case. S&P Global Inc. (NYSE:SPGI) is the most popular stock in this table. On the other hand Canadian National Railway Company (NYSE:CNI) is the least popular one with only 31 bullish hedge fund positions. Compared to these stocks Mercadolibre Inc (NASDAQ:MELI) is more popular among hedge funds. Our overall hedge fund sentiment score for MELI is 82.3. 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 7% in 2021 through March 12th and still beat the market by 1.6 percentage points. Unfortunately MELI wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on MELI were disappointed as the stock returned -7.5% since the end of the fourth quarter (through 3/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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