Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Godaddy Inc (NYSE:GDDY) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Godaddy Inc (NYSE:GDDY) has seen a decrease in activity from the world’s largest hedge funds lately. Godaddy Inc (NYSE:GDDY) was in 37 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 55. There were 39 hedge funds in our database with GDDY holdings at the end of June. Our calculations also showed that GDDY 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. Now we’re going to view the fresh hedge fund action regarding Godaddy Inc (NYSE:GDDY).
Steven Cohen of Point72 Asset Management
Do Hedge Funds Think GDDY Is A Good Stock To Buy Now?
At the end of September, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. The graph below displays the number of hedge funds with bullish position in GDDY over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Select Equity Group was the largest shareholder of Godaddy Inc (NYSE:GDDY), with a stake worth $707.7 million reported as of the end of September. Trailing Select Equity Group was BlueSpruce Investments, which amassed a stake valued at $468.4 million. North Peak Capital, Blacksheep Fund Management, and Brahman 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 North Peak Capital allocated the biggest weight to Godaddy Inc (NYSE:GDDY), around 26.69% of its 13F portfolio. Blacksheep Fund Management is also relatively very bullish on the stock, earmarking 20.44 percent of its 13F equity portfolio to GDDY.
Seeing as Godaddy Inc (NYSE:GDDY) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there is a sect of funds who sold off their full holdings by the end of the third quarter. Interestingly, Andrew Kurita’s Kettle Hill Capital Management cut the biggest stake of all the hedgies tracked by Insider Monkey, comprising about $24.1 million in stock. Jordan Moelis and Jeff Farroni’s fund, Deep Field Asset Management, also cut its stock, about $21.4 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Godaddy Inc (NYSE:GDDY). These stocks are FMC Corporation (NYSE:FMC), InterContinental Hotels Group PLC (NYSE:IHG), Trex Company, Inc. (NYSE:TREX), Procore Technologies Inc. (NYSE:PCOR), Westlake Chemical Corporation (NYSE:WLK), Host Hotels and Resorts Inc (NASDAQ:HST), and Darling Ingredients Inc. (NYSE:DAR). All of these stocks’ market caps are similar to GDDY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FMC | 28 | 349943 | -5 |
| IHG | 9 | 51166 | 3 |
| TREX | 21 | 222428 | -4 |
| PCOR | 26 | 2070478 | 26 |
| WLK | 34 | 455623 | -1 |
| HST | 16 | 178357 | -8 |
| DAR | 33 | 658844 | -8 |
| Average | 23.9 | 569548 | 0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $570 million. That figure was $2300 million in GDDY’s case. Westlake Chemical Corporation (NYSE:WLK) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Godaddy Inc (NYSE:GDDY) is more popular among hedge funds. Our overall hedge fund sentiment score for GDDY is 73.2. 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 returned 29.6% in 2021 and managed to beat the market by another 3.6 percentage points. Hedge funds were also right about betting on GDDY as the stock returned 8.6% since the end of September (through 1/31) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
