We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Vimeo Inc. (NASDAQ:VMEO) and determine whether hedge funds skillfully traded this stock.
Is Vimeo Inc. (NASDAQ:VMEO) a good investment today? Hedge funds were turning bullish. The number of long hedge fund bets rose by 36 lately. Vimeo Inc. (NASDAQ:VMEO) was in 36 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that VMEO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we’re going to check out the new hedge fund action regarding Vimeo Inc. (NASDAQ:VMEO).
Gabriel Plotkin of Melvin Capital Management
Do Hedge Funds Think VMEO Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 36 from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in VMEO a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Vimeo Inc. (NASDAQ:VMEO) was held by Thrive Capital, which reported holding $171.9 million worth of stock at the end of September. It was followed by ShawSpring Partners with a $86.7 million position. Other investors bullish on the company included Melvin Capital Management, Ulysses Management, and VGI Partners. In terms of the portfolio weights assigned to each position Thrive Capital allocated the biggest weight to Vimeo Inc. (NASDAQ:VMEO) , around 9.32% of its 13F portfolio. ShawSpring Partners is also relatively very bullish on the stock, earmarking 9.05 percent of its 13F equity portfolio to VMEO.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Vimeo Inc. (NASDAQ:VMEO) headfirst. Southpoint Capital Advisors, managed by John Smith Clark, established the biggest position in Vimeo Inc. (NASDAQ:VMEO) . Southpoint Capital Advisors had $8.8 million invested in the company at the end of the quarter. Frank Fu’s CaaS Capital also made a $7.9 million investment in the stock during the quarter. The following funds were also among the new VMEO investors: Peter Algert’s Algert Global and Peter Muller’s PDT Partners.
Let’s go over hedge fund activity in other stocks similar to Vimeo Inc. (NASDAQ:VMEO) . We will take a look at Diversey Holdings, Ltd. (NASDAQ:DSEY), The Wendy’s Company (NASDAQ:WEN), C3.ai, Inc. (NYSE:AI), Sterling Bancorp (NYSE:STL), The Chemours Company (NYSE:CC), National Fuel Gas Company (NYSE:NFG), and Adaptive Biotechnologies Corporation (NASDAQ:ADPT). This group of stocks’ market valuations resemble VMEO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DSEY | 8 | 140678 | -4 |
| WEN | 33 | 949810 | 3 |
| AI | 24 | 199056 | -5 |
| STL | 17 | 252247 | 1 |
| CC | 38 | 548945 | 14 |
| NFG | 19 | 152900 | 7 |
| ADPT | 25 | 1775850 | -2 |
| Average | 23.4 | 574212 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $574 million. That figure was $465 million in VMEO’s case. The Chemours Company (NYSE:CC) is the most popular stock in this table. On the other hand Diversey Holdings, Ltd. (NASDAQ:DSEY) is the least popular one with only 8 bullish hedge fund positions. Vimeo Inc. (NASDAQ:VMEO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VMEO is 84.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, VMEO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on VMEO were disappointed as the stock returned -50.1% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
