In this article, we discuss the 10 Reddit stocks hedge funds like.
The influx of retail investors on the stock market in recent months and the rise of social media speculation around meme stocks has given strong momentum to pump and dump schemes. This is a phenomenon not limited to just the United States but spread across the world. On August 11, the Singapore police warned traders of “a resurgence in pump and dump schemes” after seven people lost more than $1 million through investments in a publicly-traded equity. In the US, legendary investors like Mario Gabelli have raised similar warnings.
On August 30, the US Department of Justice issued an arrest warrant for Frederick Sharp, the key accused in a pump and dump scheme and accused of $1 billion worth of illegal sales of stock in penny stock firms. Investors should be cautious of these pump and dump schemes. For those who want to take advantage of the rise in interest around meme stocks, some shrewd investing techniques can also help turn a tidy profit. For example, following the smart money is almost always a good indicator of future market direction.
However, not all stocks that gain fame on Reddit are pump and dump stocks. Many of them are liked by institutional investors and hedge funds.
Some of the stocks that hedge funds like right now include Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB), Alphabet Inc. (NASDAQ: GOOG), Visa Inc. (NYSE: V), and PayPal Holdings, Inc. (NASDAQ: PYPL), among others.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Photo by Sharon McCutcheon on Unsplash
Our Methodology
The aim of the article is to provide a basic rundown of the most popular Reddit stocks among hedge funds. These stocks were picked according to the hype around them on Reddit group WallStreetBets.
The list is compiled according to the number of hedge fund holders in each company. Data from the 873 funds tracked by Insider Monkey was used for this purpose.
Special importance was assigned to outlining the basic business fundamentals and analyst ratings for each firm to provide readers with some context so they can make more informed investment choices.
Reddit Stocks Hedge Funds Like
10. Workhorse Group Inc. (NASDAQ: WKHS)
Number of Hedge Fund Holders: 13
Workhorse Group Inc. (NASDAQ: WKHS) is placed tenth on our list of 10 Reddit stocks hedge funds like. The firm operates from Ohio as a technology solutions provider.
On August 10, investment advisory DA Davidson initiated coverage of Workhorse Group Inc. (NASDAQ: WKHS) stock with a Neutral rating and a price target of $10, noting that the firm was continuing to refine the product it marketed.
At the end of the second quarter of 2021, 13 hedge funds in the database of Insider Monkey held stakes worth $60 million in Workhorse Group Inc. (NASDAQ: WKHS).
Unlike stocks with strong fundamentals like Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB), Alphabet Inc. (NASDAQ: GOOG), Visa Inc. (NYSE: V), and PayPal Holdings, Inc. (NASDAQ: PYPL), Workhorse Group Inc. (NASDAQ: WKHS) is one of the Reddit stocks hedge funds like.
9. Virgin Galactic Holdings, Inc. (NYSE: SPCE)
Number of Hedge Fund Holders: 18
Virgin Galactic Holdings, Inc. (NYSE: SPCE) is ranked ninth on our list of 10 Reddit stocks hedge funds like. The company operates from New Mexico as a human spaceflight and aerospace firm.
On August 31, investment advisory Jefferies initiated coverage of Virgin Galactic Holdings, Inc. (NYSE: SPCE) stock with a Buy rating and a price target of $33. Greg Konrad, an analyst at the firm, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Virgin Galactic Holdings, Inc. (NYSE: SPCE) with 4.5 million shares worth more than $209 million.
8. GameStop Corp. (NYSE: GME)
Number of Hedge Fund Holders: 18
GameStop Corp. (NYSE: GME) is a Texas-based retailer of entertainment and video game products. It is placed eighth on our list of 10 Reddit stocks hedge funds like.
On July 12, investment advisory Ascendiant maintained a Sell rating on GameStop Corp. (NYSE: GME) stock but raised the price target to $25 from $10, noting the update reflected the significant digital and execution risks offset by the small chance for a successful transformation.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in GameStop Corp. (NYSE: GME) with 2.7 million shares worth more than $595 million.
Unlike stocks with strong fundamentals like Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB), Alphabet Inc. (NASDAQ: GOOG), Visa Inc. (NYSE: V), and PayPal Holdings, Inc. (NASDAQ: PYPL), GameStop Corp. (NYSE: GME) is one of the Reddit stocks hedge funds like.
In its Q1 2021 investor letter, Rhizome Partners, an asset management firm, highlighted a few stocks and GameStop Corp. (NYSE: GME) was one of them. Here is what the fund said:
“The first quarter saw some bizarre market reactions. Game Stop is a heavily shorted legacy video game retailer that saw its stock price rise from $17 to a peak of $483 within a month. It appears that retail investors on a Reddit.com forum called WallStreetBets used memes to create a viral feedback loop of forced buying. Game Stop reached $20 billion in market cap and had more daily trading volume than Apple at one point. The Game Stop short squeeze became a black swan event for the short sellers. Large hedge funds such as Melvin Capital suffered 50% losses during a short period and required emergency capital injections that resulted in costly dilution. Shorting is difficult and introduces a risk of ruin. This is especially true in situations where a large percentage of the float is shorted. We want to remind you that we hedge our portfolio via index puts, sector puts, and sometimes buying puts directly in our own portfolio companies. However, we rarely short because 1) we are not good at it 2) the potential for brain damage is too high and 3) we want to avoid the risk of ruin.”
7. UWM Holdings Corporation (NYSE: UWMC)
Number of Hedge Fund Holders: 20
UWM Holdings Corporation (NYSE: UWMC) is a Michigan-based residential mortgage lender. It is ranked seventh on our list of 10 Reddit stocks hedge funds like.
On July 9, investment advisory Barclays reiterated an Overweight rating on UWM Holdings Corporation (NYSE: UWMC) stock and raised the price target to $9 from $8, underlining that the firm was poised for another quarter of growth.
At the end of the second quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $66 million in UWM Holdings Corporation (NYSE: UWMC), up from 19 in the previous quarter worth $76 million.
Unlike stocks with strong fundamentals like Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. (NASDAQ: FB), Alphabet Inc. (NASDAQ: GOOG), Visa Inc. (NYSE: V), and PayPal Holdings, Inc. (NASDAQ: PYPL), UWM Holdings Corporation (NYSE: UWMC) is one of the Reddit stocks hedge funds like.
6. Skillz Inc. (NYSE: SKLZ)
Number of Hedge Fund Holders: 20
Skillz Inc. (NYSE: SKLZ) is placed sixth on our list of 10 Reddit stocks hedge funds like. The firm operates from California as a technology company.
On August 4, investment advisory Canaccord maintained a Buy rating on Skillz Inc. (NYSE: SKLZ) stock but lowered the price target to $23 from $30, noting that the firm was under pressure as the user base was not expanding.
At the end of the second quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Skillz Inc. (NYSE: SKLZ).
5. ContextLogic Inc. (NASDAQ: WISH)
Number of Hedge Fund Holders: 21
ContextLogic Inc. (NASDAQ: WISH) is ranked fifth on our list of 10 Reddit stocks hedge funds like. The firm owns and operates a mobile ecommerce platform and is headquartered in California.
On August 23, investment advisory Citi kept a Neutral rating on ContextLogic Inc. (NASDAQ: WISH) stock but lowered the price target to $7.50 from $12, highlighting that the firm was having difficulty sustaining growth due to higher user churn and elevated ad rates.
Out of the hedge funds being tracked by Insider Monkey, New York-based firm JS Capital is a leading shareholder in ContextLogic Inc. (NASDAQ: WISH) with 1.8 million shares worth more than $24 million.
4. AMC Entertainment Holdings, Inc. (NYSE: AMC)
Number of Hedge Fund Holders: 21
AMC Entertainment Holdings, Inc. (NYSE: AMC) is a Kansas-based company involved in the theatrical exhibitions business. It is placed fourth on our list of 10 Reddit stocks hedge funds like.
On August 19, investment advisory Citi kept a Sell rating on AMC Entertainment Holdings, Inc. (NYSE: AMC) stock but raised the price target to $5 from $3.70, underlining that the remained overvalued at current levels.
At the end of the first quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $404 million in AMC Entertainment Holdings, Inc. (NYSE: AMC), up from 19 in the preceding quarter worth $34 million.
In its Q4 2020 investor letter, Mittleman Investment Management LLC, an asset management firm, highlighted a few stocks and AMC Entertainment Holdings, Inc. (NYSE: AMC) was one of them. Here is what the fund said:
“AMC Entertainment (AMC) was our only material loser in Q4, dropping from $4.71 to $2.12 (-55%). I planned on discussing here why it was worth at least the $10 per share that my recently reduced estimate of fair value claimed, but since then AMC raised more cash against their UK holdings and then the stock took off due to speculative players from reddit.com getting involved, so we sold it all around $14 during the last week of Jan. 2021. This was a modest profit for most clients, but a loss for some others, depending on when the account began, so check your statements to see where you came out. And yes, I recognize it as being a dose of good luck, which I heartily accept from the universe as it seemed somewhat lacking in the portfolio of late. After the sale of AMC in late January 2021, our exposure to the movie theater business is now exclusively in Canada via Cineplex, which has a 75% market share and much less leverage on its balance sheet.”
3. Clover Health Investments, Corp. (NASDAQ: CLOV)
Number of Hedge Fund Holders: 23
Clover Health Investments, Corp. (NASDAQ: CLOV) is a Tennessee-based Medicare advantage insurer. It is ranked third on our list of 10 Reddit stocks hedge funds like.
On May 18, investment advisory Citi reiterated a Buy rating on Clover Health Investments, Corp. (NASDAQ: CLOV) stock but lowered the price target to $10 from $13, noting the firm had another rough quarter despite higher revenue.
Out of the hedge funds being tracked by Insider Monkey, San Francisco-based investment firm Greenoaks Capital is a leading shareholder in Clover Health Investments, Corp. (NASDAQ: CLOV) with 96.3 million shares worth more than $1.2 billion.
2. Palantir Technologies Inc. (NYSE: PLTR)
Number of Hedge Fund Holders: 26
Palantir Technologies Inc. (NYSE: PLTR) is placed second on our list of 10 Reddit stocks hedge funds like. The firm provides analytics and software solutions to the intelligence community and is based in Colorado.
On August 13, investment advisory Morgan Stanley maintained an Underweight rating on Palantir Technologies Inc. (NYSE: PLTR) stock and raised the price target to $22 from $19, underlining that there were questions about the durability of the near-term growth of the firm.
At the end of the second quarter of 2021, 26 hedge funds in the database of Insider Monkey held stakes worth $1.3 billion in Palantir Technologies Inc. (NYSE: PLTR).
In its Q4 2020 investor letter, Guardian Fund, an asset management firm, highlighted a few stocks andPalantir Technologies Inc. (NYSE: PLTR) was one of them. Here is what the fund said:
“In October, we bought a stake in Palantir. Earlier, in June, our concentrated Tech Fund, which has a mandate to also buy shares in the secondary market, bought shares of Palantir from insiders, before the direct listing. At the price we bought, the equity had much more upside than downside. Palantir is operating a software platform that functions as the digital infrastructure for data-driven operations and decision making. The software helps to structure and capture context in data of large corporations. Governments are increasingly realizing that they have to deal with serious data challenges and cyber risk. As most governments cannot attract the most talented software engineers, they need private enterprises such as Palantir to help them build solid infrastructure. Foundry, Palantir’s software for enterprises, is used by companiesto make safer cars and airplanes or to accelerate cancer research. The speed to bring new clients on board is improving and revenues will grow faster than expenses. Palantir has a long runway of growth ahead.”
1. Paysafe Limited (NYSE: PSFE)
Number of Hedge Fund Holders: 50
Paysafe Limited (NYSE: PSFE) is ranked first on our list of 10 Reddit stocks hedge funds like. The firm is headquartered in Bermuda and provides ecommerce solutions to businesses.
On August 12, investment advisory Bank of America initiated coverage of Paysafe Limited (NYSE: PSFE) stock with a Buy rating and a price target of $15, noting the firm was uniquely positioned to benefit from the rapidly growing iGaming market.
At the end of the second quarter of 2021, 50 hedge funds in the database of Insider Monkey held stakes worth $1.1 billion in Paysafe Limited (NYSE: PSFE), up from 41 in the previous quarter worth $1.3 billion.
You can also take a peek at 10 Best Healthcare Dividend Stocks to Buy Now and 10 Dividend Stocks with Over 20 Years of Dividend Increases.
Follow Insider Monkey on Twitter
Suggested Articles:
- 11 Biotech Stocks Popular On Reddit
- 10 Best Stocks to Buy According to Michael Burry
- 15 Best Penny Stocks to Buy Now
Disclosure. None. 10 Reddit Stocks Hedge Funds Like is originally published on Insider Monkey.
