How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Match Group, Inc. (NASDAQ:MTCH) and determine whether hedge funds had an edge regarding this stock.
Is Match Group, Inc. (NASDAQ:MTCH) a good stock to buy now? The best stock pickers were getting less optimistic. The number of bullish hedge fund bets were cut by 7 lately. Match Group, Inc. (NASDAQ:MTCH) was in 56 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 72. Our calculations also showed that MTCH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Andreas Halvorsen of Viking Global
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 let’s check out the fresh hedge fund action encompassing Match Group, Inc. (NASDAQ:MTCH).
Do Hedge Funds Think MTCH Is A Good Stock To Buy Now?
At third quarter’s end, a total of 56 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MTCH over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Among these funds, Lone Pine Capital held the most valuable stake in Match Group, Inc. (NASDAQ:MTCH), which was worth $1220.4 million at the end of the third quarter. On the second spot was Steadfast Capital Management which amassed $260.9 million worth of shares. Viking Global, Citadel Investment Group, and Polar 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 Fernbridge Capital Management allocated the biggest weight to Match Group, Inc. (NASDAQ:MTCH), around 6.07% of its 13F portfolio. Lone Pine Capital is also relatively very bullish on the stock, designating 4.11 percent of its 13F equity portfolio to MTCH.
Because Match Group, Inc. (NASDAQ:MTCH) has experienced a decline in interest from hedge fund managers, we can see that there is a sect of money managers that decided to sell off their entire stakes last quarter. Interestingly, John Armitage’s Egerton Capital Limited dumped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, comprising about $206.3 million in stock, and Alexander Mitchell’s Scopus Asset Management was right behind this move, as the fund dropped about $112.9 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 7 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Match Group, Inc. (NASDAQ:MTCH) but similarly valued. These stocks are Roblox Corporation (NYSE:RBLX), Ambev SA (NYSE:ABEV), Southern Copper Corporation (NYSE:SCCO), Canadian Pacific Railway Limited (NYSE:CP), Newmont Corporation (NYSE:NEM), Canadian Natural Resources Limited (NYSE:CNQ), and National Grid plc (NYSE:NGG). 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 |
|---|---|---|---|
| RBLX | 50 | 3575923 | 1 |
| ABEV | 15 | 79897 | -3 |
| SCCO | 23 | 403491 | 0 |
| CP | 38 | 6638996 | 13 |
| NEM | 48 | 774451 | -7 |
| CNQ | 27 | 956988 | 0 |
| NGG | 5 | 314057 | -2 |
| Average | 29.4 | 1820543 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.4 hedge funds with bullish positions and the average amount invested in these stocks was $1821 million. That figure was $2663 million in MTCH’s case. Roblox Corporation (NYSE:RBLX) is the most popular stock in this table. On the other hand National Grid plc (NYSE:NGG) is the least popular one with only 5 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 71.3. 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 29.6% in 2021 and still beat the market by 3.6 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 -28.2% 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 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.
