We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Wix.Com Ltd (NASDAQ:WIX), and what that likely means for the prospects of the company and its stock.
Is Wix.Com Ltd (NASDAQ:WIX) a buy right now? The smart money is buying. The number of long hedge fund positions went up by 1 lately. WIX was in 20 hedge funds’ portfolios at the end of the third quarter of 2016. There were 19 hedge funds in our database with WIX holdings 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 Baytex Energy Corp (USA) (NYSE:BTE), Comfort Systems USA, Inc. (NYSE:FIX), and Cray Inc. (NASDAQ:CRAY) to gather more data points.
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Hedge fund activity in Wix.Com Ltd (NASDAQ:WIX)
Heading into the fourth quarter of 2016, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 5% rise from the previous quarter and a greater than 50% rise since the end of March. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Robert Pitts’ Steadfast Capital Management has the largest position in Wix.Com Ltd (NASDAQ:WIX), worth close to $151.9 million, comprising 2.7% of its total 13F portfolio. Coming in second is Renaissance Technologies, led by Jim Simons, holding a $57.5 million position. Some other hedge funds and institutional investors with similar optimism include Adam Wolfberg and Steven Landry’s EastBay Asset Management, John Overdeck and David Siegel’s Two Sigma Advisors and Steve Cohen’s Point72 Asset Management.
With general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, created the largest position in Wix.Com Ltd (NASDAQ:WIX). Balyasny Asset Management had $12.4 million invested in the company at the end of the quarter. Bijan Modanlou, Joseph Bou-Saba, and Jayaveera Kodali’s Alta Park Capital also initiated a $4.5 million position during the quarter. The following funds were also among the new WIX investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Warren Lammert’s Granite Point Capital, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Wix.Com Ltd (NASDAQ:WIX). These stocks are Baytex Energy Corp (USA) (NYSE:BTE), Comfort Systems USA, Inc. (NYSE:FIX), Cray Inc. (NASDAQ:CRAY), and Sturm, Ruger & Company (NYSE:RGR). All of these stocks’ market caps match WIX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BTE | 10 | 23599 | 3 |
| FIX | 20 | 135484 | -1 |
| CRAY | 13 | 29916 | -5 |
| RGR | 15 | 76647 | -1 |
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $66 million. That figure was $326 million in WIX’s case. Comfort Systems USA, Inc. (NYSE:FIX) is the most popular stock in this table. On the other hand Baytex Energy Corp (USA) (NYSE:BTE) is the least popular one with only 10 bullish hedge fund positions. Wix.Com Ltd (NASDAQ:WIX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal, as we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FIX and WIX might be good candidates to consider taking long positions in.
Disclosure: None
