Was The Smart Money Right About eBay Inc (EBAY)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of eBay Inc (NASDAQ:EBAY) based on that data and determine whether they were really smart about the stock.

Is eBay Inc (NASDAQ:EBAY) an excellent investment today? Investors who are in the know were in a bullish mood. The number of bullish hedge fund bets improved by 10 in recent months. eBay Inc (NASDAQ:EBAY) was in 49 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 83. Our calculations also showed that EBAY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to take a gander at the recent hedge fund action surrounding eBay Inc (NASDAQ:EBAY).

Robert Atchinson of Adage Capital Management

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

At the end of the third quarter, a total of 49 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 26% from the previous quarter. On the other hand, there were a total of 50 hedge funds with a bullish position in EBAY a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Ako Capital was the largest shareholder of eBay Inc (NASDAQ:EBAY), with a stake worth $512.5 million reported as of the end of September. Trailing Ako Capital was Baupost Group, which amassed a stake valued at $416.8 million. Lyrical Asset Management, Rima Senvest Management, and Nitorum 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 Ivy Lane Capital allocated the biggest weight to eBay Inc (NASDAQ:EBAY), around 8.76% of its 13F portfolio. Brahman Capital is also relatively very bullish on the stock, designating 7.71 percent of its 13F equity portfolio to EBAY.

As one would reasonably expect, some big names were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, created the largest position in eBay Inc (NASDAQ:EBAY). Balyasny Asset Management had $55.1 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also made a $48.4 million investment in the stock during the quarter. The other funds with brand new EBAY positions are Israel Englander’s Millennium Management, Michael Rockefeller and KarláKroeker’s Woodline Partners, and Harry Gail’s Harspring Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to eBay Inc (NASDAQ:EBAY). We will take a look at Palantir Technologies Inc. (NYSE:PLTR), The Kraft Heinz Company (NASDAQ:KHC), TE Connectivity Ltd. (NYSE:TEL), Carrier Global Corporation (NYSE:CARR), The Bank of New York Mellon Corporation (NYSE:BK), T. Rowe Price Group, Inc. (NASDAQ:TROW), and Kimberly Clark Corporation (NYSE:KMB). This group of stocks’ market valuations are closest to EBAY’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.7 hedge funds with bullish positions and the average amount invested in these stocks was $3287 million. That figure was $2098 million in EBAY’s case. Carrier Global Corporation (NYSE:CARR) is the most popular stock in this table. On the other hand Kimberly Clark Corporation (NYSE:KMB) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks eBay Inc (NASDAQ:EBAY) is more popular among hedge funds. Our overall hedge fund sentiment score for EBAY is 77.7. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, EBAY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EBAY were disappointed as the stock returned -13.6% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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