Were Hedge Funds Right About Piling Into Match Group, Inc. (MTCH)?

In this article we are going to use hedge fund sentiment as a tool and determine whether Match Group, Inc. (NASDAQ:MTCH) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Is Match Group, Inc. (NASDAQ:MTCH) a first-rate stock to buy now? The smart money was getting more optimistic. The number of long hedge fund positions moved up by 11 recently. Match Group, Inc. (NASDAQ:MTCH) was in 72 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 61. This means the bullish number of hedge fund positions in this stock reached a brand new all time high. Our calculations also showed that MTCH isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

John Armitage of Egerton Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Keeping this in mind we’re going to check out the new hedge fund action surrounding Match Group, Inc. (NASDAQ:MTCH).

Do Hedge Funds Think MTCH Is A Good Stock To Buy Now?

At the end of December, a total of 72 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the previous quarter. By comparison, 32 hedge funds held shares or bullish call options in MTCH a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

The largest stake in Match Group, Inc. (NASDAQ:MTCH) was held by Lone Pine Capital, which reported holding $796.3 million worth of stock at the end of December. It was followed by Egerton Capital Limited with a $491.7 million position. Other investors bullish on the company included Whale Rock Capital Management, Tybourne Capital Management, and Melvin Capital Management. In terms of the portfolio weights assigned to each position Portsea Asset Management allocated the biggest weight to Match Group, Inc. (NASDAQ:MTCH), around 32.09% of its 13F portfolio. ShawSpring Partners is also relatively very bullish on the stock, designating 16.53 percent of its 13F equity portfolio to MTCH.

Consequently, some big names were leading the bulls’ herd. Whale Rock Capital Management, managed by Alex Sacerdote, assembled the most valuable position in Match Group, Inc. (NASDAQ:MTCH). Whale Rock Capital Management had $370.7 million invested in the company at the end of the quarter. Gabriel Plotkin’s Melvin Capital Management also made a $170.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Andreas Halvorsen’s Viking Global, Brian Ashford-Russell and Tim Woolley’s Polar Capital, and Eric Bannasch’s Cadian Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Match Group, Inc. (NASDAQ:MTCH) but similarly valued. We will take a look at Rocket Companies, Inc. (NYSE:RKT), TE Connectivity Ltd. (NYSE:TEL), KLA Corporation (NASDAQ:KLAC), Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), L3Harris Technologies, Inc. (NYSE:LHX), Synopsys, Inc. (NASDAQ:SNPS), and Amphenol Corporation (NYSE:APH). This group of stocks’ market valuations are similar to MTCH’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.7 hedge funds with bullish positions and the average amount invested in these stocks was $1021 million. That figure was $3781 million in MTCH’s case. Amphenol Corporation (NYSE:APH) is the most popular stock in this table. On the other hand Rocket Companies, Inc. (NYSE:RKT) is the least popular one with only 16 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 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Unfortunately MTCH wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on MTCH were disappointed as the stock returned -3.4% since the end of the fourth quarter (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.