In this article you are going to find out whether hedge funds think Mercadolibre Inc (NASDAQ:MELI) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Mercadolibre Inc (NASDAQ:MELI) going to take off soon? The smart money was taking a bearish view. The number of long hedge fund bets went down by 10 lately. Mercadolibre Inc (NASDAQ:MELI) was in 69 hedge funds’ portfolios at the end of March. 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 Q1 rankings).
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Alex Sacerdote of Whale Rock Capital Management
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Do Hedge Funds Think MELI Is A Good Stock To Buy Now?
At the end of March, a total of 69 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. By comparison, 60 hedge funds held shares or bullish call options in MELI a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Lone Pine Capital, holds the biggest position in Mercadolibre Inc (NASDAQ:MELI). Lone Pine Capital has a $1.0528 billion position in the stock, comprising 3.8% of its 13F portfolio. The second most bullish fund manager is Alkeon Capital Management, managed by Panayotis Takis Sparaggis, which holds a $495.1 million position; 0.7% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism consist of Ken Griffin’s Citadel Investment Group, Alex Sacerdote’s Whale Rock Capital Management and Ken Fisher’s Fisher Asset Management. In terms of the portfolio weights assigned to each position Prince Street Capital Management allocated the biggest weight to Mercadolibre Inc (NASDAQ:MELI), around 14.23% of its 13F portfolio. Marcho Partners is also relatively very bullish on the stock, setting aside 13.21 percent of its 13F equity portfolio to MELI.
Judging by the fact that Mercadolibre Inc (NASDAQ:MELI) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there were a few hedgies that decided to sell off their positions entirely heading into Q2. At the top of the heap, Rajiv Jain’s GQG Partners dropped the biggest position of the “upper crust” of funds tracked by Insider Monkey, worth about $1815.3 million in stock. Gabriel Plotkin’s fund, Melvin Capital Management, also cut its stock, about $335 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 10 funds heading into Q2.
Let’s also examine hedge fund activity in other stocks similar to Mercadolibre Inc (NASDAQ:MELI). We will take a look at CME Group Inc (NASDAQ:CME), CSX Corporation (NYSE:CSX), Baidu, Inc. (NASDAQ:BIDU), Activision Blizzard, Inc. (NASDAQ:ATVI), ConocoPhillips (NYSE:COP), NetEase, Inc (NASDAQ:NTES), and Chubb Limited (NYSE:CB). All of these stocks’ market caps are closest to MELI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CME | 60 | 2399257 | 2 |
| CSX | 53 | 3699622 | -5 |
| BIDU | 89 | 6572291 | 38 |
| ATVI | 76 | 3580901 | -5 |
| COP | 51 | 1205455 | 2 |
| NTES | 32 | 3501491 | -6 |
| CB | 41 | 1605208 | 7 |
| Average | 57.4 | 3223461 | 4.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 57.4 hedge funds with bullish positions and the average amount invested in these stocks was $3223 million. That figure was $5223 million in MELI’s case. Baidu, Inc. (NASDAQ:BIDU) is the most popular stock in this table. On the other hand NetEase, Inc (NASDAQ:NTES) is the least popular one with only 32 bullish hedge fund positions. Mercadolibre Inc (NASDAQ:MELI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MELI is 53. 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 25.8% in 2021 through August 6th and still beat the market by 6.7 percentage points. Hedge funds were also right about betting on MELI, though not to the same extent, as the stock returned 19.3% since Q1 (through August 6th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
