Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Is eBay Inc (NASDAQ:EBAY) a first-rate investment now? Hedge funds are getting less bullish. The number of bullish hedge fund positions fell by 16 lately. EBAY was in 83 hedge funds’ portfolios at the end of September. There were 99 hedge funds in our database with EBAY positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Syngenta AG (ADR) (NYSE:SYT), Liberty Global PLC LiLAC Class A (NASDAQ:LILA), and Praxair, Inc. (NYSE:PX) to gather more data points.
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Keeping this in mind, we’re going to take a gander at the key action regarding eBay Inc (NASDAQ:EBAY).
What does the smart money think about eBay Inc (NASDAQ:EBAY)?
At the end of the third quarter, a total of 83 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Daniel S. Och’s OZ Management has the biggest position in eBay Inc (NASDAQ:EBAY), worth close to $531.6 million, comprising 1.9% of its total 13F portfolio. The second largest stake is held by Baupost Group, managed by Seth Klarman, which holds a $227.7 million position; the fund has 3.8% of its 13F portfolio invested in the stock. Some other peers that hold long positions contain William B. Gray’s Orbis Investment Management, Dan Loeb’s Third Point and Cliff Asness’ AQR Capital Management.
Because eBay Inc (NASDAQ:EBAY) has witnessed falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of fund managers who were dropping their full holdings heading into Q4. Interestingly, Carl Icahn’s Icahn Capital LP cut the largest stake of all the hedgies tracked by Insider Monkey, valued at close to $2,787.4 million in stock. Barry Rosenstein’s fund, JANA Partners, also said goodbye to its stock, about $692.8 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 16 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as eBay Inc (NASDAQ:EBAY) but similarly valued. These stocks are Syngenta AG (ADR) (NYSE:SYT), Liberty Global PLC LiLAC Class A (NASDAQ:LILA), Praxair, Inc. (NYSE:PX), and V.F. Corporation (NYSE:VFC). This group of stocks’ market valuations are closest to EBAY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SYT | 13 | 44954 | -3 |
| LILA | 28 | 100775 | 28 |
| PX | 29 | 749140 | -1 |
| VFC | 34 | 1200090 | -2 |
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $524 million. That figure was $3,682 million in EBAY’s case. V.F. Corporation (NYSE:VFC) is the most popular stock in this table. On the other hand Syngenta AG (ADR) (NYSE:SYT) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks eBay Inc (NASDAQ:EBAY) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
