It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 5.2% over the 12-month period ending October 30, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey (as of September 2014) generated a return of 9.5% over the same time span, with 63% of these stocks outperforming the benchmark. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Twitter Inc (NYSE:TWTR).
Is Twitter Inc (NYSE:TWTR) worth your attention right now? The best stock pickers are becoming less confident. The number of bullish hedge fund bets were trimmed by 20 in recent months. TWTR was in 27 hedge funds’ portfolios at the end of September. There were 47 hedge funds in our database with TWTR holdings at the end of the previous quarter. At the end of this article we will also compare TWTR to other stocks including Boston Properties, Inc. (NYSE:BXP), Sasol Limited (ADR) (NYSE:SSL), and Pioneer Natural Resources (NYSE:PXD) to get a better sense of its popularity.
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With all of this in mind, we’re going to take a glance at the recent action surrounding Twitter Inc (NYSE:TWTR).
What does the smart money think about Twitter Inc (NYSE:TWTR)?
At Q3’s end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -43% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Ken Griffin’s Citadel Investment Group has the biggest call position in Twitter Inc (NYSE:TWTR), worth close to $52.2 million, comprising 0.1% of its total 13F portfolio. The second largest stake is held by D E Shaw, with an $29.1 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish consist of Brian Ashford-Russell and Tim Woolley’s Polar Capital and Matthew Hulsizer’s PEAK6 Capital Management.
Due to the fact that Twitter Inc (NYSE:TWTR) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of funds that elected to cut their entire stakes heading into Q4. Intriguingly, Matthew Knauer and Mina Faltas’s Nokota Management dumped the biggest stake of the “upper crust” of funds followed by Insider Monkey, comprising close to $58 million in stock, and Daniel Benton’s Andor Capital Management was right behind this move, as the fund cut about $54.3 million worth. These moves are important to note, as total hedge fund interest dropped by 20 funds heading into Q4.
Let’s now review hedge fund activity in other stocks similar to Twitter Inc (NYSE:TWTR). We will take a look at Boston Properties, Inc. (NYSE:BXP), Sasol Limited (ADR) (NYSE:SSL), Pioneer Natural Resources (NYSE:PXD), and Marriott International Inc (NYSE:MAR). This group of stocks’ market values are similar to TWTR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BXP | 21 | 651123 | -6 |
| SSL | 10 | 26608 | 3 |
| PXD | 58 | 4236272 | 0 |
| MAR | 29 | 494155 | -2 |
As you can see these stocks had an average of 29.5 hedge funds with bullish positions and the average amount invested in these stocks was $1352 million. That figure was $248 million in TWTR’s case. Pioneer Natural Resources (NYSE:PXD) is the most popular stock in this table. On the other hand Sasol Limited (ADR) (NYSE:SSL) is the least popular one with only 10 bullish hedge fund positions. Twitter Inc (NYSE:TWTR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PXD might be a better candidate to consider a long position.
