At Insider Monkey, we pore over the filings of nearly 887 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 December 31st. In this article, we will use that wealth of knowledge to determine whether or not Snap Inc. (NYSE:SNAP) makes for a good investment right now.
Is Snap Inc. (NYSE:SNAP) going to take off soon? Hedge funds were becoming more confident. The number of long hedge fund bets rose by 12 in recent months. Snap Inc. (NYSE:SNAP) was in 63 hedge funds’ portfolios at the end of December. The all time high for this statistic is 66. Our calculations also showed that SNAP isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 51 hedge funds in our database with SNAP positions at the end of the third quarter.
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). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Siegel of Two Sigma Advisors
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Do Hedge Funds Think SNAP Is A Good Stock To Buy Now?
At Q4’s end, a total of 63 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 24% from one quarter earlier. On the other hand, there were a total of 66 hedge funds with a bullish position in SNAP a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Lone Pine Capital held the most valuable stake in Snap Inc. (NYSE:SNAP), which was worth $976.9 million at the end of the fourth quarter. On the second spot was D E Shaw which amassed $700.4 million worth of shares. Arrowstreet Capital, Two Sigma Advisors, and Renaissance Technologies 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 Dorsal Capital Management allocated the biggest weight to Snap Inc. (NYSE:SNAP), around 9.41% of its 13F portfolio. EMS Capital is also relatively very bullish on the stock, setting aside 8.51 percent of its 13F equity portfolio to SNAP.
As industrywide interest jumped, some big names have been driving this bullishness. Lone Pine Capital, initiated the largest position in Snap Inc. (NYSE:SNAP). Lone Pine Capital had $976.9 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $273.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Renaissance Technologies, Alex Sacerdote’s Whale Rock Capital Management, and Edmond M. Safra’s EMS Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Snap Inc. (NYSE:SNAP). These stocks are Baidu, Inc. (NASDAQ:BIDU), Prologis Inc (NYSE:PLD), Colgate-Palmolive Company (NYSE:CL), Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR), Gilead Sciences, Inc. (NASDAQ:GILD), Becton, Dickinson and Company (NYSE:BDX), and KE Holdings Inc (NYSE:BEKE). This group of stocks’ market caps resemble SNAP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BIDU | 51 | 4634061 | 8 |
| PLD | 36 | 655443 | 3 |
| CL | 46 | 1515874 | -1 |
| PBR | 24 | 1335976 | -7 |
| GILD | 72 | 2021867 | 11 |
| BDX | 65 | 3961016 | 3 |
| BEKE | 30 | 2038963 | 2 |
| Average | 46.3 | 2309029 | 2.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 46.3 hedge funds with bullish positions and the average amount invested in these stocks was $2309 million. That figure was $4611 million in SNAP’s case. Gilead Sciences, Inc. (NASDAQ:GILD) is the most popular stock in this table. On the other hand Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR) is the least popular one with only 24 bullish hedge fund positions. Snap Inc. (NYSE:SNAP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SNAP is 79.3. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on SNAP as the stock returned 23.5% since the end of Q4 (through 4/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
