Do Hedge Funds Love Affirm Holdings, Inc. (AFRM)?

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was Affirm Holdings, Inc. (NASDAQ:AFRM).

Is Affirm Holdings, Inc. (NASDAQ:AFRM) the right pick for your portfolio? Money managers were taking an optimistic view. The number of bullish hedge fund bets moved up by 32 in recent months. Affirm Holdings, Inc. (NASDAQ:AFRM) was in 32 hedge funds’ portfolios at the end of March. Our calculations also showed that AFRM isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Billionaire Ken Griffin's Top 10 Stocks Holdings

Ken Griffin of Citadel Investment Group

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to take a gander at the latest hedge fund action encompassing Affirm Holdings, Inc. (NASDAQ:AFRM).

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

At Q1’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 32 from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in AFRM a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Affirm Holdings, Inc. (NASDAQ:AFRM) was held by Thrive Capital, which reported holding $278.3 million worth of stock at the end of December. It was followed by ThornTree Capital Partners with a $53.6 million position. Other investors bullish on the company included Echo Street Capital Management, ThornTree Capital Partners, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Thrive Capital allocated the biggest weight to Affirm Holdings, Inc. (NASDAQ:AFRM), around 20.39% of its 13F portfolio. Hidden Lake Asset Management is also relatively very bullish on the stock, setting aside 8.47 percent of its 13F equity portfolio to AFRM.

With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Thrive Capital, managed by Joshua Kushner, created the largest position in Affirm Holdings, Inc. (NASDAQ:AFRM). Thrive Capital had $278.3 million invested in the company at the end of the quarter. Mark Moore’s ThornTree Capital Partners also initiated a $53.6 million position during the quarter. The following funds were also among the new AFRM investors: Greg Poole’s Echo Street Capital Management, Mark Moore’s ThornTree Capital Partners, and Ken Griffin’s Citadel Investment Group.

Let’s now review hedge fund activity in other stocks similar to Affirm Holdings, Inc. (NASDAQ:AFRM). We will take a look at Expeditors International of Washington, Inc. (NASDAQ:EXPD), Rogers Communications Inc. (NYSE:RCI), Invitation Homes Inc. (NYSE:INVH), SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), Catalent Inc (NYSE:CTLT), The AES Corporation (NYSE:AES), and Incyte Corporation (NASDAQ:INCY). All of these stocks’ market caps are similar to AFRM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EXPD 21 440396 -4
RCI 18 289168 3
INVH 28 1174443 1
SSNC 54 2671021 5
CTLT 29 1016499 -6
AES 51 1541608 13
INCY 32 3851519 -5
Average 33.3 1569236 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.3 hedge funds with bullish positions and the average amount invested in these stocks was $1569 million. That figure was $583 million in AFRM’s case. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is the most popular stock in this table. On the other hand Rogers Communications Inc. (NYSE:RCI) is the least popular one with only 18 bullish hedge fund positions. Affirm Holdings, Inc. (NASDAQ:AFRM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AFRM is 41.1. 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 22.8% in 2021 through July 2nd and surpassed the market again by 6 percentage points. Unfortunately AFRM wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); AFRM investors were disappointed as the stock returned -2.6% since the end of March (through 7/2) 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.