Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Twitter Inc (NYSE:TWTR) in this article.
Twitter Inc (NYSE:TWTR) was in 107 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 78. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. TWTR shareholders have witnessed an increase in hedge fund interest recently. There were 78 hedge funds in our database with TWTR holdings at the end of December. Our calculations also showed that TWTR ranked 17th among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Paul Singer of Elliott 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 we’re going to analyze the fresh hedge fund action encompassing Twitter Inc (NYSE:TWTR).
Do Hedge Funds Think TWTR Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 107 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 37% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards TWTR over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, ARK Investment Management was the largest shareholder of Twitter Inc (NYSE:TWTR), with a stake worth $495.9 million reported as of the end of March. Trailing ARK Investment Management was Elliott Investment Management, which amassed a stake valued at $445.4 million. SRS Investment Management, Citadel Investment Group, and Atreides 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 Ivy Lane Capital allocated the biggest weight to Twitter Inc (NYSE:TWTR), around 17.25% of its 13F portfolio. Stone House Capital is also relatively very bullish on the stock, setting aside 12.1 percent of its 13F equity portfolio to TWTR.
Now, key money managers have been driving this bullishness. ARK Investment Management, managed by Catherine D. Wood, established the biggest position in Twitter Inc (NYSE:TWTR). ARK Investment Management had $495.9 million invested in the company at the end of the quarter. Gavin Baker’s Atreides Management also made a $299.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Alex Sacerdote’s Whale Rock Capital Management, Brian Ashford-Russell and Tim Woolley’s Polar Capital, and Gavin Baker’s Atreides Management.
Let’s go over hedge fund activity in other stocks similar to Twitter Inc (NYSE:TWTR). We will take a look at Regeneron Pharmaceuticals Inc (NASDAQ:REGN), Canadian Pacific Railway Limited (NYSE:CP), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), The Kraft Heinz Company (NASDAQ:KHC), Relx PLC (NYSE:RELX), Dollar General Corp. (NYSE:DG), and Keurig Dr Pepper Inc. (NASDAQ:KDP). This group of stocks’ market caps are similar to TWTR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| REGN | 39 | 1308238 | -7 |
| CP | 33 | 5908185 | 9 |
| SMFG | 14 | 88068 | 4 |
| KHC | 33 | 13334618 | -3 |
| RELX | 4 | 85198 | -4 |
| DG | 52 | 2341556 | -5 |
| KDP | 30 | 934902 | 1 |
| Average | 29.3 | 3428681 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.3 hedge funds with bullish positions and the average amount invested in these stocks was $3429 million. That figure was $4535 million in TWTR’s case. Dollar General Corp. (NYSE:DG) is the most popular stock in this table. On the other hand Relx PLC (NYSE:RELX) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Twitter Inc (NYSE:TWTR) is more popular among hedge funds. Our overall hedge fund sentiment score for TWTR is 92. 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 TWTR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TWTR were disappointed as the stock returned 5.9% 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 Twitter Inc. (NYSE:TWTR)
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Disclosure: None. This article was originally published at Insider Monkey.
