BigCommerce Holdings, Inc. (BIGC): Hedge Fund Sentiment Unchanged

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding BigCommerce Holdings, Inc. (NASDAQ:BIGC).

BigCommerce Holdings, Inc. (NASDAQ:BIGC) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 21 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that BIGC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). 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 Xerox Holdings Corporation (NASDAQ:XRX), Viavi Solutions Inc (NASDAQ:VIAV), and Riskified Ltd. (NYSE:RSKD) to gather more data points.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to analyze the key hedge fund action regarding BigCommerce Holdings, Inc. (NASDAQ:BIGC).

Do Hedge Funds Think BIGC Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 18 hedge funds with a bullish position in BIGC a year ago. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

Among these funds, Matrix Capital Management held the most valuable stake in BigCommerce Holdings, Inc. (NASDAQ:BIGC), which was worth $238 million at the end of the third quarter. On the second spot was Echo Street Capital Management which amassed $117.2 million worth of shares. Darsana Capital Partners, Tiger Global Management LLC, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Darsana Capital Partners allocated the biggest weight to BigCommerce Holdings, Inc. (NASDAQ:BIGC), around 3.75% of its 13F portfolio. Matrix Capital Management is also relatively very bullish on the stock, dishing out 2.71 percent of its 13F equity portfolio to BIGC.

Because BigCommerce Holdings, Inc. (NASDAQ:BIGC) has experienced falling interest from the aggregate hedge fund industry, we can see that there were a few hedgies that elected to cut their full holdings in the third quarter. Interestingly, Joseph Samuels’s Islet Management dumped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, comprising close to $32.5 million in stock, and Anand Parekh’s Alyeska Investment Group was right behind this move, as the fund dumped about $14.9 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as BigCommerce Holdings, Inc. (NASDAQ:BIGC) but similarly valued. These stocks are Xerox Holdings Corporation (NASDAQ:XRX), Viavi Solutions Inc (NASDAQ:VIAV), Riskified Ltd. (NYSE:RSKD), frontdoor, inc. (NASDAQ:FTDR), Apple Hospitality REIT Inc (NYSE:APLE), Altra Industrial Motion Corp. (NASDAQ:AIMC), and Box, Inc. (NYSE:BOX). This group of stocks’ market values are closest to BIGC’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $386 million. That figure was $616 million in BIGC’s case. frontdoor, inc. (NASDAQ:FTDR) is the most popular stock in this table. On the other hand Altra Industrial Motion Corp. (NASDAQ:AIMC) is the least popular one with only 14 bullish hedge fund positions. BigCommerce Holdings, Inc. (NASDAQ:BIGC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BIGC is 45.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately BIGC wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BIGC investors were disappointed as the stock returned -30.2% since the end of September (through 12/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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