At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Shutterstock Inc (NYSE:SSTK) makes for a good investment right now.
Shutterstock Inc (NYSE:SSTK) was in 15 hedge funds’ portfolios at the end of the third quarter of 2019. SSTK has experienced a decrease in enthusiasm from smart money of late. There were 18 hedge funds in our database with SSTK holdings at the end of the previous quarter. Our calculations also showed that SSTK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Paul Marshall of Marshall Wace
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let’s review the new hedge fund action encompassing Shutterstock Inc (NYSE:SSTK).
What does smart money think about Shutterstock Inc (NYSE:SSTK)?
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SSTK over the last 17 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Shutterstock Inc (NYSE:SSTK), which was worth $31.6 million at the end of the third quarter. On the second spot was D E Shaw which amassed $18.4 million worth of shares. Marshall Wace, Two Sigma Advisors, and Arrowstreet Capital 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 PDT Partners allocated the biggest weight to Shutterstock Inc (NYSE:SSTK), around 0.07% of its 13F portfolio. Marshall Wace is also relatively very bullish on the stock, designating 0.06 percent of its 13F equity portfolio to SSTK.
Seeing as Shutterstock Inc (NYSE:SSTK) has faced falling interest from the smart money, we can see that there were a few hedgies who were dropping their full holdings last quarter. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest stake of all the hedgies tracked by Insider Monkey, worth about $0.7 million in stock, and Brandon Haley’s Holocene Advisors was right behind this move, as the fund said goodbye to about $0.5 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 3 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Shutterstock Inc (NYSE:SSTK) but similarly valued. We will take a look at Perficient, Inc. (NASDAQ:PRFT), Pampa Energia S.A. (NYSE:PAM), S & T Bancorp Inc (NASDAQ:STBA), and Armada Hoffler Properties Inc (NYSE:AHH). All of these stocks’ market caps resemble SSTK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PRFT | 15 | 63971 | -1 |
| PAM | 10 | 64708 | -2 |
| STBA | 10 | 24720 | -1 |
| AHH | 14 | 91721 | 5 |
| Average | 12.25 | 61280 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $79 million in SSTK’s case. Perficient, Inc. (NASDAQ:PRFT) is the most popular stock in this table. On the other hand Pampa Energia S.A. (NYSE:PAM) is the least popular one with only 10 bullish hedge fund positions. Shutterstock Inc (NYSE:SSTK) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on SSTK as the stock returned 15.1% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
