Is SKLZ Stock A Buy or Sell?

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 at Insider Monkey have plowed through 887 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Skillz Inc. (NYSE:SKLZ).

Is SKLZ stock a buy? Money managers were becoming more confident. The number of bullish hedge fund positions went up by 33 recently. Skillz Inc. (NYSE:SKLZ) was in 33 hedge funds’ portfolios at the end of the fourth quarter of 2020. Our calculations also showed that SKLZ isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Michael Platt of BlueCrest Capital Mgmt.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). 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 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 we’re going to review the new hedge fund action surrounding Skillz Inc. (NYSE:SKLZ).

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

At Q4’s end, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33 from the third quarter of 2020. By comparison, 0 hedge funds held shares or bullish call options in SKLZ a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Wildcat Capital Management held the most valuable stake in Skillz Inc. (NYSE:SKLZ), which was worth $428.7 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $91.5 million worth of shares. Washington Harbour Partners, Adage Capital Management, and BlueCrest Capital Mgmt. 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 Wildcat Capital Management allocated the biggest weight to Skillz Inc. (NYSE:SKLZ), around 53.87% of its 13F portfolio. Washington Harbour Partners is also relatively very bullish on the stock, dishing out 10.62 percent of its 13F equity portfolio to SKLZ.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Wildcat Capital Management, managed by Leonard A. Potter, created the most outsized position in Skillz Inc. (NYSE:SKLZ). Wildcat Capital Management had $428.7 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $91.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Mina Faltas’s Washington Harbour Partners, Phill Gross and Robert Atchinson’s Adage Capital Management, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..

Let’s check out hedge fund activity in other stocks similar to Skillz Inc. (NYSE:SKLZ). These stocks are InVitae Corporation (NYSE:NVTA), Bausch Health Companies Inc. (NYSE:BHC), US Foods Holding Corp. (NYSE:USFD), Arrow Electronics, Inc. (NYSE:ARW), Allakos Inc. (NASDAQ:ALLK), argenx SE (NASDAQ:ARGX), and UGI Corp (NYSE:UGI). This group of stocks’ market values are closest to SKLZ’s market value.

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As you can see these stocks had an average of 29.6 hedge funds with bullish positions and the average amount invested in these stocks was $1438 million. That figure was $719 million in SKLZ’s case. US Foods Holding Corp. (NYSE:USFD) is the most popular stock in this table. On the other hand Allakos Inc. (NASDAQ:ALLK) is the least popular one with only 11 bullish hedge fund positions. Skillz Inc. (NYSE:SKLZ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SKLZ is 63.3. 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. 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 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 7.9% in 2021 through April 1st and beat the market again by 0.4 percentage points. Unfortunately SKLZ wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on SKLZ were disappointed as the stock returned -6.3% since the end of December (through 4/1) 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 many of these stocks already outperformed the market since 2019.

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