Is Qurate Retail, Inc. (QRTEA) A Good Stock To Buy?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Qurate Retail, Inc. (NASDAQ:QRTEA).

Is QRTEA a good stock to buy? The smart money was taking a bullish view. The number of long hedge fund positions inched up by 8 lately. Qurate Retail, Inc. (NASDAQ:QRTEA) was in 39 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 43. Our calculations also showed that QRTEA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Andrew Raab of FPR Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. 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. 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. Now let’s take a gander at the recent hedge fund action encompassing Qurate Retail, Inc. (NASDAQ:QRTEA).

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

At the end of the second quarter, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 26% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in QRTEA over the last 24 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Andrew Wellington and Jeff Keswin’s Lyrical Asset Management has the largest position in Qurate Retail, Inc. (NASDAQ:QRTEA), worth close to $167.3 million, corresponding to 2% of its total 13F portfolio. Coming in second is FPR Partners, managed by Bob Peck and Andy Raab, which holds a $160.9 million position; 4.1% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions encompass Stephen Mildenhall’s Contrarius Investment Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position General Equity Partners allocated the biggest weight to Qurate Retail, Inc. (NASDAQ:QRTEA), around 11.81% of its 13F portfolio. Makaira Partners is also relatively very bullish on the stock, earmarking 7.74 percent of its 13F equity portfolio to QRTEA.

As aggregate interest increased, key hedge funds have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the biggest position in Qurate Retail, Inc. (NASDAQ:QRTEA). Balyasny Asset Management had $23.7 million invested in the company at the end of the quarter. Steven Tananbaum’s GoldenTree Asset Management also made a $9.9 million investment in the stock during the quarter. The other funds with brand new QRTEA positions are Don Morgan’s Brigade Capital, Sander Gerber’s Hudson Bay Capital Management, and Ira Unschuld’s Brant Point Investment Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Qurate Retail, Inc. (NASDAQ:QRTEA) but similarly valued. We will take a look at Coursera, Inc. (NYSE:COUR), The Howard Hughes Corporation (NYSE:HHC), Medallia, Inc. (NYSE:MDLA), HollyFrontier Corporation (NYSE:HFC), SolarWinds Corporation (NYSE:SWI), Iridium Communications Inc. (NASDAQ:IRDM), and Schrodinger, Inc. (NASDAQ:SDGR). This group of stocks’ market caps are closest to QRTEA’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $755 million. That figure was $890 million in QRTEA’s case. HollyFrontier Corporation (NYSE:HFC) is the most popular stock in this table. On the other hand Coursera, Inc. (NYSE:COUR) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Qurate Retail, Inc. (NASDAQ:QRTEA) is more popular among hedge funds. Our overall hedge fund sentiment score for QRTEA is 87.2. 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 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Unfortunately QRTEA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on QRTEA were disappointed as the stock returned -23.4% since the end of the second quarter (through 10/11) 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 most of these stocks already outperformed the market since 2019.

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