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 Pinterest, Inc. (NYSE:PINS).
Pinterest, Inc. (NYSE:PINS) investors should be aware of a decrease in support from the world’s most elite money managers recently. Pinterest, Inc. (NYSE:PINS) was in 83 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 95. There were 95 hedge funds in our database with PINS holdings at the end of December. Our calculations also showed that PINS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
To the average investor there are a lot of metrics stock market investors employ to size up stocks. A couple of the best metrics are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can outpace the S&P 500 by a very impressive amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Alex Sacerdote of Whale Rock Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium 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. Now let’s take a peek at the latest hedge fund action regarding Pinterest, Inc. (NYSE:PINS).
Do Hedge Funds Think PINS Is A Good Stock To Buy Now?
At first quarter’s end, a total of 83 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PINS over the last 23 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
More specifically, Alkeon Capital Management was the largest shareholder of Pinterest, Inc. (NYSE:PINS), with a stake worth $506.9 million reported as of the end of March. Trailing Alkeon Capital Management was Whale Rock Capital Management, which amassed a stake valued at $373.9 million. Melvin Capital Management, Coatue Management, and ARK Investment Management 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 Half Sky Capital allocated the biggest weight to Pinterest, Inc. (NYSE:PINS), around 30.27% of its 13F portfolio. Ogborne Capital is also relatively very bullish on the stock, dishing out 16.46 percent of its 13F equity portfolio to PINS.
Seeing as Pinterest, Inc. (NYSE:PINS) has experienced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few hedge funds that slashed their positions entirely heading into Q2. It’s worth mentioning that Rajiv Jain’s GQG Partners dumped the largest investment of all the hedgies monitored by Insider Monkey, valued at close to $93.9 million in stock. Josh Resnick’s fund, Jericho Capital Asset Management, also cut its stock, about $69.4 million worth. These moves are interesting, as total hedge fund interest fell by 12 funds heading into Q2.
Let’s now review hedge fund activity in other stocks similar to Pinterest, Inc. (NYSE:PINS). These stocks are Las Vegas Sands Corp. (NYSE:LVS), Rocket Companies, Inc. (NYSE:RKT), Carvana Co. (NYSE:CVNA), America Movil SAB de CV (NYSE:AMX), TC Energy Corporation (NYSE:TRP), Barclays PLC (NYSE:BCS), and Eni SpA (NYSE:E). This group of stocks’ market valuations are closest to PINS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LVS | 62 | 2441021 | -1 |
| RKT | 21 | 208014 | 5 |
| CVNA | 64 | 7536279 | 1 |
| AMX | 15 | 93823 | -1 |
| TRP | 25 | 429089 | 6 |
| BCS | 10 | 79712 | -2 |
| E | 4 | 74023 | 0 |
| Average | 28.7 | 1551709 | 1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.7 hedge funds with bullish positions and the average amount invested in these stocks was $1552 million. That figure was $4189 million in PINS’s case. Carvana Co. (NYSE:CVNA) is the most popular stock in this table. On the other hand Eni SpA (NYSE:E) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Pinterest, Inc. (NYSE:PINS) is more popular among hedge funds. Our overall hedge fund sentiment score for PINS is 69.2. 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 25.8% in 2021 through August 6th and still beat the market by 6.7 percentage points. Unfortunately PINS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PINS were disappointed as the stock returned -20.6% since the end of the first quarter (through 8/6) 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.
Follow Pinterest Inc. (NYSE:PINS)
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Disclosure: None. This article was originally published at Insider Monkey.
