Did Hedge Funds Drop The Ball On LendingTree, Inc (TREE) ?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of LendingTree, Inc (NASDAQ:TREE) based on that data and determine whether they were really smart about the stock.

Is LendingTree, Inc (NASDAQ:TREE) worth your attention right now? The smart money was reducing their bets on the stock. The number of bullish hedge fund positions fell by 5 lately. Our calculations also showed that TREE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). TREE was in 21 hedge funds’ portfolios at the end of March. There were 26 hedge funds in our database with TREE holdings at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most investors, hedge funds are perceived as slow, outdated financial tools of yesteryear. While there are more than 8000 funds trading at the moment, Our experts choose to focus on the elite of this group, about 850 funds. These hedge fund managers manage bulk of the hedge fund industry’s total capital, and by observing their finest stock picks, Insider Monkey has identified numerous investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .


Ken Griffin of Citadel Investment Group

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now we’re going to review the latest hedge fund action encompassing LendingTree, Inc (NASDAQ:TREE).

How are hedge funds trading LendingTree, Inc (NASDAQ:TREE)?

Heading into the second quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TREE over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is TREE A Good Stock To Buy?

More specifically, Citadel Investment Group was the largest shareholder of LendingTree, Inc (NASDAQ:TREE), with a stake worth $33.5 million reported as of the end of September. Trailing Citadel Investment Group was Renaissance Technologies, which amassed a stake valued at $11.1 million. G2 Investment Partners Management, Citadel Investment Group, and PAR Capital 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 G2 Investment Partners Management allocated the biggest weight to LendingTree, Inc (NASDAQ:TREE), around 2.96% of its 13F portfolio. P.A.W. CAPITAL PARTNERS is also relatively very bullish on the stock, setting aside 0.99 percent of its 13F equity portfolio to TREE.

Seeing as LendingTree, Inc (NASDAQ:TREE) has experienced declining sentiment from the smart money, we can see that there was a specific group of hedgies who were dropping their full holdings heading into Q4. Intriguingly, Dmitry Balyasny’s Balyasny Asset Management cut the largest position of all the hedgies tracked by Insider Monkey, totaling about $5.4 million in stock. John Osterweis’s fund, Osterweis Capital Management, also said goodbye to its stock, about $1.6 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 5 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as LendingTree, Inc (NASDAQ:TREE) but similarly valued. We will take a look at Lattice Semiconductor Corporation (NASDAQ:LSCC), Assured Guaranty Ltd. (NYSE:AGO), W.R. Grace & Co. (NYSE:GRA), and Amicus Therapeutics, Inc. (NASDAQ:FOLD). This group of stocks’ market values resemble TREE’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LSCC 26 531051 -6
AGO 28 299640 -5
GRA 35 866211 -11
FOLD 28 842269 -7
Average 29.25 634793 -7.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.25 hedge funds with bullish positions and the average amount invested in these stocks was $635 million. That figure was $74 million in TREE’s case. W.R. Grace & Co. (NYSE:GRA) is the most popular stock in this table. On the other hand Lattice Semiconductor Corporation (NASDAQ:LSCC) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks LendingTree, Inc (NASDAQ:TREE) is even less popular than LSCC. Hedge funds clearly dropped the ball on TREE as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 18.6% in 2020 through July 27th and still beat the market by 17.1 percentage points. A small number of hedge funds were also right about betting on TREE as the stock returned 92.6% since the end of March and outperformed the market by an even larger margin.

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