We at Insider Monkey have gone over 873 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article, we look at what those funds think of Farfetch Limited (NYSE:FTCH) based on that data.
Farfetch Limited (NYSE:FTCH) investors should be aware of an increase in activity from the world’s largest hedge funds of late. Farfetch Limited (NYSE:FTCH) was in 63 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 57. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FTCH isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Daniel Sundheim of D1 Capital Partners
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. Keeping this in mind we’re going to take a glance at the recent hedge fund action encompassing Farfetch Limited (NYSE:FTCH).
Do Hedge Funds Think FTCH 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 were long this stock, a change of 11% from one quarter earlier. By comparison, 37 hedge funds held shares or bullish call options in FTCH a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in Farfetch Limited (NYSE:FTCH) was held by Lone Pine Capital, which reported holding $950.1 million worth of stock at the end of June. It was followed by D1 Capital Partners with a $474.6 million position. Other investors bullish on the company included D E Shaw, SoMa Equity Partners, and Holocene Advisors. In terms of the portfolio weights assigned to each position Clearfield Capital allocated the biggest weight to Farfetch Limited (NYSE:FTCH), around 12.6% of its 13F portfolio. Kuvari Partners is also relatively very bullish on the stock, dishing out 10.6 percent of its 13F equity portfolio to FTCH.
As aggregate interest increased, some big names were leading the bulls’ herd. D1 Capital Partners, managed by Daniel Sundheim, created the largest position in Farfetch Limited (NYSE:FTCH). D1 Capital Partners had $474.6 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $193.1 million investment in the stock during the quarter. The other funds with brand new FTCH positions are Israel Englander’s Millennium Management, Robert Pitts’s Steadfast Capital Management, and Lee Ainslie’s Maverick Capital.
Let’s now review hedge fund activity in other stocks similar to Farfetch Limited (NYSE:FTCH). These stocks are Affirm Holdings, Inc. (NASDAQ:AFRM), Raymond James Financial, Inc. (NYSE:RJF), Duke Realty Corporation (NYSE:DRE), Brookfield Property Partners LP (NYSE:BPY), Amcor plc (NYSE:AMCR), Clarivate Plc (NYSE:CLVT), and MarketAxess Holdings Inc. (NASDAQ:MKTX). This group of stocks’ market caps are closest to FTCH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AFRM | 25 | 823640 | -7 |
| RJF | 29 | 662093 | -4 |
| DRE | 15 | 49169 | -5 |
| BPY | 17 | 562276 | 0 |
| AMCR | 16 | 212571 | -1 |
| CLVT | 41 | 5366780 | 15 |
| MKTX | 31 | 605312 | -3 |
| Average | 24.9 | 1183120 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.9 hedge funds with bullish positions and the average amount invested in these stocks was $1183 million. That figure was $4253 million in FTCH’s case. Clarivate Plc (NYSE:CLVT) is the most popular stock in this table. On the other hand Duke Realty Corporation (NYSE:DRE) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Farfetch Limited (NYSE:FTCH) is more popular among hedge funds. Our overall hedge fund sentiment score for FTCH is 90. 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 FTCH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FTCH were disappointed as the stock returned -22.1% 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.
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Disclosure: None. This article was originally published at Insider Monkey.
