After Taking Profits, Merion Road Capital Says Pinterest (PINS) is “No Longer Attractive”

Merion Road Capital Management, an investment management firm, published its fourth-quarter 2020 Investor Letter for its ‘MRCM Long Short Small Cap’ and ‘MRCM Long Only Large Cap’– a copy of which can be downloaded here. A return of 11.5% was recorded by its Long Short Small Cap fund for the Q4 of 2020, outperforming its Barclay Hedge Fund index that made a 9% return, but below its Russell 2000 benchmark that delivered 31.3%. Its Long Only Large Cap fund delivered a 21.2% return, above its S&P 500 benchmark that accumulated 12.1%. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Merion Road Capital Management, in their Q4 2020 Investor Letter, said that Pinterest, Inc. (NYSE: PINS) was one of their largest contributors during the fourth quarter of 2020. Pinterest, Inc. is a visual discovery engine, social networking service that currently has a $54.7 billion market cap. For the past 3 months, PINS delivered a decent 44.42% return and settled at $87.03 per share at the closing of February 11th.

Here is what Merion Road Capital Management has to say about Pinterest, Inc. in their Q4 2020 investor letter:

“One of our larger contributors for the year was Pinterest (“PINS”). I’ve never discussed PINS before as it is not a major holding. That being said the stock increased about 250% during the year, so even our mid-tier exposure was quite impactful. I initiated our position at the end of last year as the market penalized the company for missing revenue estimates. I added in Q1 as the stock continued to fall based on potential advertising headwinds. The thesis was always a simple one. PINS has a phenomenal product with an engaged, loyal, and growing customer base. They have the ability to increase revenue per user through improved adtech and services (i.e. shopping). There are limited social media properties and advertisers need alternatives to keep the Google / Facebook duopoly in check. And PINS is a trophy asset that should attract retail investors looking to own a name that they know. I have been reducing our exposure as the price has appreciated and the return profile is no longer as attractive.”

Pixabay/Public Domain

Just recently, we published an article about Blue Hawk Investment Group’s bullish thesis on Pinterest, Inc. (NYSE: PINS). PINS delivered a massive 269.71% return in the past 12 months..

Our calculations show that Pinterest, Inc. (NYSE: PINS) does not belong in our list of the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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Disclosure: None. This article is originally published at Insider Monkey.