The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Paysafe Limited (NYSE:PSFE) and determine whether the smart money was really smart about this stock.
Paysafe Limited (NYSE:PSFE) investors should pay attention to a decrease in enthusiasm from smart money of late. Paysafe Limited (NYSE:PSFE) was in 42 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 50. Our calculations also showed that PSFE 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 latest hedge fund action regarding Paysafe Limited (NYSE:PSFE).
Bart Baum of Ionic Capital Management
Do Hedge Funds Think PSFE Is A Good Stock To Buy Now?
At the end of September, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from the second quarter of 2021. By comparison, 0 hedge funds held shares or bullish call options in PSFE a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Dan Loeb’s Third Point has the largest position in Paysafe Limited (NYSE:PSFE), worth close to $305.9 million, accounting for 1.7% of its total 13F portfolio. The second most bullish fund manager is David Tepper of Appaloosa Management LP, with a $65.9 million position; the fund has 1.6% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions comprise Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors, Seth Rosen’s Nitorum Capital and Phill Gross and Robert Atchinson’s Adage Capital Management. In terms of the portfolio weights assigned to each position Indaba Capital Management allocated the biggest weight to Paysafe Limited (NYSE:PSFE), around 2.79% of its 13F portfolio. Nitorum Capital is also relatively very bullish on the stock, designating 1.84 percent of its 13F equity portfolio to PSFE.
Judging by the fact that Paysafe Limited (NYSE:PSFE) has experienced falling interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of money managers who were dropping their entire stakes by the end of the third quarter. Intriguingly, Aaron Cowen’s Suvretta Capital Management dumped the largest stake of the “upper crust” of funds watched by Insider Monkey, valued at close to $156.4 million in stock. Tom Purcell and Marco Tablada’s fund, Alua Capital Management, also dropped its stock, about $19.5 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 8 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Paysafe Limited (NYSE:PSFE) but similarly valued. These stocks are Luminar Technologies, Inc. (NASDAQ:LAZR), Goosehead Insurance, Inc. (NASDAQ:GSHD), Pacific Biosciences of California, Inc. (NASDAQ:PACB), Dingdong (Cayman) Limited (NYSE:DDL), AbCellera Biologics Inc. (NASDAQ:ABCL), Amplitude Inc. (NASDAQ:AMPL), and Bank OZK (NASDAQ:OZK). This group of stocks’ market values resemble PSFE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LAZR | 12 | 111108 | -9 |
| GSHD | 13 | 210178 | -1 |
| PACB | 27 | 1341476 | -1 |
| DDL | 5 | 191421 | 5 |
| ABCL | 21 | 660359 | 3 |
| AMPL | 15 | 313271 | 15 |
| OZK | 22 | 128945 | 3 |
| Average | 16.4 | 422394 | 2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.4 hedge funds with bullish positions and the average amount invested in these stocks was $422 million. That figure was $597 million in PSFE’s case. Pacific Biosciences of California, Inc. (NASDAQ:PACB) is the most popular stock in this table. On the other hand Dingdong (Cayman) Limited (NYSE:DDL) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Paysafe Limited (NYSE:PSFE) is more popular among hedge funds. Our overall hedge fund sentiment score for PSFE is 72.2. 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, PSFE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PSFE were disappointed as the stock returned -53.2% 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.
Follow Paysafe Limited (NYSE:PSFE)
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Disclosure: None. This article was originally published at Insider Monkey.
