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. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Momo Inc (NASDAQ:MOMO) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is MOMO a good stock to buy? Momo Inc (NASDAQ:MOMO) has experienced a decrease in support from the world’s most elite money managers recently. Momo Inc (NASDAQ:MOMO) was in 30 hedge funds’ portfolios at the end of September. The all time high for this statistic is 45. There were 34 hedge funds in our database with MOMO positions at the end of the second quarter. Our calculations also showed that MOMO 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.
According to most investors, hedge funds are viewed as worthless, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading today, Our experts look at the upper echelon of this club, approximately 850 funds. These hedge fund managers manage most of the hedge fund industry’s total asset base, and by tailing their matchless picks, Insider Monkey has figured out several investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Kerr Neilson of Platinum Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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. With all of this in mind let’s take a gander at the fresh hedge fund action encompassing Momo Inc (NASDAQ:MOMO).
Do Hedge Funds Think MOMO Is A Good Stock To Buy Now?
At the end of September, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from one quarter earlier. On the other hand, there were a total of 27 hedge funds with a bullish position in MOMO a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Momo Inc (NASDAQ:MOMO), with a stake worth $195 million reported as of the end of September. Trailing Renaissance Technologies was Platinum Asset Management, which amassed a stake valued at $34.5 million. Tiger Pacific Capital, Yiheng Capital, and Kylin 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 Tiger Pacific Capital allocated the biggest weight to Momo Inc (NASDAQ:MOMO), around 6.86% of its 13F portfolio. Kylin Management is also relatively very bullish on the stock, designating 6.41 percent of its 13F equity portfolio to MOMO.
Since Momo Inc (NASDAQ:MOMO) has experienced a decline in interest from the smart money, it’s safe to say that there were a few funds who sold off their entire stakes heading into Q4. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the largest stake of the 750 funds tracked by Insider Monkey, totaling about $48.6 million in stock, and Hyder Ahmad’s Broad Peak Investment Holdings was right behind this move, as the fund dumped about $17.9 million worth. These moves are important to note, as total hedge fund interest was cut by 4 funds heading into Q4.
Let’s now review hedge fund activity in other stocks similar to Momo Inc (NASDAQ:MOMO). We will take a look at Digital Turbine Inc (NASDAQ:APPS), Univar Solutions Inc (NYSE:UNVR), EnerSys (NYSE:ENS), Sorrento Therapeutics Inc (NASDAQ:SRNE), NCR Corporation (NYSE:NCR), Cogent Communications Holdings Inc. (NASDAQ:CCOI), and TechnipFMC plc (NYSE:FTI). This group of stocks’ market values are similar to MOMO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| APPS | 23 | 332289 | 5 |
| UNVR | 30 | 839273 | -1 |
| ENS | 22 | 107763 | -4 |
| SRNE | 13 | 100794 | 1 |
| NCR | 32 | 309659 | 0 |
| CCOI | 28 | 385884 | 0 |
| FTI | 31 | 549277 | 0 |
| Average | 25.6 | 374991 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $375 million. That figure was $363 million in MOMO’s case. NCR Corporation (NYSE:NCR) is the most popular stock in this table. On the other hand Sorrento Therapeutics Inc (NASDAQ:SRNE) is the least popular one with only 13 bullish hedge fund positions. Momo Inc (NASDAQ:MOMO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MOMO is 65.7. 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. 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 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 gained 33.3% in 2020 through December 18th and beat the market again by 16.4 percentage points. Unfortunately MOMO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on MOMO were disappointed as the stock returned 0% since the end of September (through 12/18) 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 so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
