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 Mercadolibre Inc (NASDAQ:MELI) based on that data and determine whether they were really smart about the stock.
Mercadolibre Inc (NASDAQ:MELI) has seen a decrease in enthusiasm from smart money lately. Mercadolibre Inc (NASDAQ:MELI) was in 68 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 81. Our calculations also showed that MELI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Eashwar Krishnan of Tybourne Capital Management
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. Keeping this in mind let’s take a gander at the recent hedge fund action surrounding Mercadolibre Inc (NASDAQ:MELI).
Do Hedge Funds Think MELI Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 68 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. By comparison, 81 hedge funds held shares or bullish call options in MELI a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
More specifically, Alkeon Capital Management was the largest shareholder of Mercadolibre Inc (NASDAQ:MELI), with a stake worth $747.6 million reported as of the end of September. Trailing Alkeon Capital Management was Citadel Investment Group, which amassed a stake valued at $480.1 million. D E Shaw, Fisher Asset Management, and Tybourne Capital Management 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 Prince Street Capital Management allocated the biggest weight to Mercadolibre Inc (NASDAQ:MELI), around 16.51% of its 13F portfolio. Crosslink Capital is also relatively very bullish on the stock, dishing out 12.81 percent of its 13F equity portfolio to MELI.
Seeing as Mercadolibre Inc (NASDAQ:MELI) has witnessed falling interest from hedge fund managers, logic holds that there lies a certain “tier” of funds that elected to cut their full holdings by the end of the third quarter. Intriguingly, Nitin Saigal and Dan Jacobs’s Kora Management sold off the biggest investment of the “upper crust” of funds tracked by Insider Monkey, valued at about $55.3 million in stock. Sanjay Venkat’s fund, Jeneq Management, also said goodbye to its stock, about $40.3 million worth. These transactions are interesting, as total hedge fund interest was cut by 6 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Mercadolibre Inc (NASDAQ:MELI) but similarly valued. These stocks are The Blackstone Group Inc. (NYSE:BX), PNC Financial Services Group Inc. (NYSE:PNC), Equinor ASA (NYSE:EQNR), Canadian National Railway Company (NYSE:CNI), Mondelez International Inc (NASDAQ:MDLZ), British American Tobacco plc (NYSE:BTI), and Enbridge Inc (NYSE:ENB). This group of stocks’ market valuations match MELI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BX | 54 | 2545773 | 0 |
| PNC | 41 | 506241 | 3 |
| EQNR | 11 | 163324 | 0 |
| CNI | 42 | 7392349 | 2 |
| MDLZ | 46 | 1922079 | -7 |
| BTI | 9 | 724383 | -3 |
| ENB | 24 | 211478 | 5 |
| Average | 32.4 | 1923661 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.4 hedge funds with bullish positions and the average amount invested in these stocks was $1924 million. That figure was $4371 million in MELI’s case. The Blackstone Group Inc. (NYSE:BX) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Mercadolibre Inc (NASDAQ:MELI) is more popular among hedge funds. Our overall hedge fund sentiment score for MELI is 74.2. 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 gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, MELI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on MELI were disappointed as the stock returned -32.6% 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.
