In this article we are going to use hedge fund sentiment as a tool and determine whether Match Group, Inc. (NASDAQ:MTCH) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Match Group, Inc. (NASDAQ:MTCH) has experienced a decrease in support from the world’s most elite money managers of late. Match Group, Inc. (NASDAQ:MTCH) was in 63 hedge funds’ portfolios at the end of June. The all time high for this statistic is 72. There were 68 hedge funds in our database with MTCH holdings at the end of March. Our calculations also showed that MTCH isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
John Armitage of Egerton Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, the demand for helium is soaring and there is a helium supply shortage, so we are checking out stock pitches like this emerging helium stock. 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. 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 homepage. Now let’s analyze the new hedge fund action encompassing Match Group, Inc. (NASDAQ:MTCH).
Do Hedge Funds Think MTCH Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 63 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in MTCH over the last 24 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Match Group, Inc. (NASDAQ:MTCH) was held by Lone Pine Capital, which reported holding $1249.1 million worth of stock at the end of June. It was followed by Viking Global with a $380 million position. Other investors bullish on the company included Egerton Capital Limited, Steadfast Capital Management, and Polar Capital. In terms of the portfolio weights assigned to each position Black-and-White Capital allocated the biggest weight to Match Group, Inc. (NASDAQ:MTCH), around 7% of its 13F portfolio. Anomaly Capital Management is also relatively very bullish on the stock, designating 6.13 percent of its 13F equity portfolio to MTCH.
Because Match Group, Inc. (NASDAQ:MTCH) has witnessed falling interest from hedge fund managers, it’s easy to see that there is a sect of funds that decided to sell off their positions entirely heading into Q3. At the top of the heap, Eashwar Krishnan’s Tybourne Capital Management dumped the largest stake of the 750 funds followed by Insider Monkey, totaling about $73.4 million in stock, and Hyder Ahmad’s Broad Peak Investment Holdings was right behind this move, as the fund said goodbye to about $53.2 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 5 funds heading into Q3.
Let’s now review hedge fund activity in other stocks similar to Match Group, Inc. (NASDAQ:MTCH). We will take a look at Marriott International Inc (NYSE:MAR), L3Harris Technologies, Inc. (NASDAQ:LHX), Ross Stores, Inc. (NASDAQ:ROST), Trane Technologies plc (NYSE:TT), MSCI Inc (NYSE:MSCI), Chipotle Mexican Grill, Inc. (NYSE:CMG), and Eni SpA (NYSE:E). This group of stocks’ market valuations are closest to MTCH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MAR | 49 | 2454304 | -9 |
| LHX | 42 | 1016540 | 1 |
| ROST | 51 | 1448653 | 3 |
| TT | 37 | 1250491 | 2 |
| MSCI | 37 | 772551 | -1 |
| CMG | 35 | 3204586 | -6 |
| E | 3 | 69407 | -1 |
| Average | 36.3 | 1459505 | -1.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.3 hedge funds with bullish positions and the average amount invested in these stocks was $1460 million. That figure was $3369 million in MTCH’s case. Ross Stores, Inc. (NASDAQ:ROST) is the most popular stock in this table. On the other hand Eni SpA (NYSE:E) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Match Group, Inc. (NASDAQ:MTCH) is more popular among hedge funds. Our overall hedge fund sentiment score for MTCH is 76.3. 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 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 26.3% in 2021 through October 29th and still beat the market by 2.3 percentage points. Unfortunately MTCH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MTCH were disappointed as the stock returned -6.5% since the end of the second quarter (through 10/29) 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 most of these stocks already outperformed the market since 2019.
Follow Match Group Holdings Ii (Old) (NASDAQ:MTCH)
Follow Match Group Holdings Ii (Old) (NASDAQ:MTCH)
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Disclosure: None. This article was originally published at Insider Monkey.
