The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Shutterstock Inc (NYSE:SSTK) from the perspective of those successful funds.
Is Shutterstock Inc (NYSE:SSTK) a buy here? The smart money is really buying. The number of long hedge fund investments improved by 2 in recent months. SSTK was in 9 hedge funds’ portfolios at the end of September. There were 7 hedge funds in our database with SSTK positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Wageworks Inc (NYSE:WAGE), Manitowoc Foodservice Inc(NYSE:MFS), and Darling International Inc. (NYSE:DAR) to gather more data points.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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What does the smart money think about Shutterstock Inc (NYSE:SSTK)?
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a gain of 29% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SSTK over the last 5 quarters. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, holds the largest position in Shutterstock Inc (NYSE:SSTK). Renaissance Technologies has a $19.2 million position in the stock. Coming in second is D E Shaw, led by D. E. Shaw, which holds a $5.7 million position. Remaining members of the smart money with similar optimism encompass Cliff Asness’ AQR Capital Management, and Frank Slattery’s Symmetry Peak Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As one would reasonably expect, specific money managers were breaking ground themselves. PEAK6 Capital Management, led by Matthew Hulsizer, established the largest call position in Shutterstock Inc (NYSE:SSTK). PEAK6 Capital Management had $2.4 million invested in the company at the end of the quarter. Symmetry Peak Management also made a $2.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Panayotis Takis Sparaggis’ Alkeon Capital Management.
Let’s check out hedge fund activity in other stocks similar to Shutterstock Inc (NYSE:SSTK). We will take a look at Wageworks Inc (NYSE:WAGE), Manitowoc Foodservice Inc(NYSE:MFS), Darling International Inc. (NYSE:DAR), and J&J Snack Foods Corp. (NASDAQ:JJSF). 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 |
|---|---|---|---|
| WAGE | 10 | 84067 | -1 |
| MFS | 20 | 716809 | 1 |
| DAR | 24 | 291374 | -6 |
| JJSF | 10 | 54617 | 1 |
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $287 million. That figure was $37 million in SSTK’s case. Darling International Inc. (NYSE:DAR) is the most popular stock in this table. On the other hand Wageworks Inc (NYSE:WAGE) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Shutterstock Inc (NYSE:SSTK) is even less popular than WAGE. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
