It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Mercadolibre Inc (NASDAQ:MELI).
Is Mercadolibre Inc (NASDAQ:MELI) the right pick for your portfolio? Hedge funds are betting on the stock. The number of long hedge fund bets inched up by 8 lately. MELI was in 29 hedge funds’ portfolios at the end of September. There were 21 hedge funds in our database with MELI holdings at the end of the previous quarter. At the end of this article we will also compare MELI to other stocks including Liberty Broadband Corp (NASDAQ:LBRDK), FMC Corp (NYSE:FMC), and Liberty Broadband Corp (NASDAQ:LBRDA) to get a better sense of its popularity.
Follow Mercadolibre Inc (NASDAQ:MELI)
Follow Mercadolibre Inc (NASDAQ:MELI)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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How have hedgies been trading Mercadolibre Inc (NASDAQ:MELI)?
Heading into the fourth quarter of 2016, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 38% from the second quarter of 2016. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, David Blood and Al Gore’s Generation Investment Management has the number one position in Mercadolibre Inc (NASDAQ:MELI), worth close to $123.8 million, corresponding to 1.3% of its total 13F portfolio. The second largest stake is held by Orbis Investment Management, managed by William B. Gray, which holds a $122.7 million position. Remaining hedge funds and institutional investors that hold long positions consist of Josh Resnick’s Jericho Capital Asset Management, Dmitry Balyasny’s Balyasny Asset Management and Glen Kacher’s Light Street Capital.
As aggregate interest increased, key money managers were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, assembled the largest call position in Mercadolibre Inc (NASDAQ:MELI). Citadel Investment Group had $11.7 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $10 million position during the quarter. The other funds with new positions in the stock are Jim Simons’ Renaissance Technologies, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and John Paulson’s Paulson & Co.
Let’s also examine hedge fund activity in other stocks similar to Mercadolibre Inc (NASDAQ:MELI). We will take a look at Liberty Broadband Corp (NASDAQ:LBRDK), FMC Corp (NYSE:FMC), Liberty Broadband Corp (NASDAQ:LBRDA), and Spirit Realty Capital Inc (NYSE:SRC). All of these stocks’ market caps resemble MELI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LBRDK | 42 | 3745967 | -1 |
| FMC | 28 | 1015438 | -9 |
| LBRDA | 27 | 399996 | 1 |
| SRC | 17 | 340235 | -3 |
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $1.38 billion. That figure was $593 million in MELI’s case. Liberty Broadband Corp (NASDAQ:LBRDK) is the most popular stock in this table. On the other hand Spirit Realty Capital Inc (NYSE:SRC) is the least popular one with only 17 bullish hedge fund positions. Mercadolibre Inc (NASDAQ:MELI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LBRDK might be a better candidate to consider a long position.
Disclosure: None
