Hedge Funds Are Dumping Pinterest, Inc. (PINS) Big Time

In this article you are going to find out whether hedge funds think Pinterest, Inc. (NYSE:PINS) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Pinterest, Inc. (NYSE:PINS) a buy here? The smart money was in a pessimistic mood. The number of long hedge fund bets dropped by 20 lately. Pinterest, Inc. (NYSE:PINS) was in 63 hedge funds’ portfolios at the end of June. The all time high for this statistic is 95. Our calculations also showed that PINS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

According to most market participants, hedge funds are assumed to be slow, outdated investment tools of yesteryear. While there are more than 8000 funds with their doors open at present, Our researchers hone in on the moguls of this group, around 850 funds. These hedge fund managers direct bulk of all hedge funds’ total capital, and by keeping track of their best investments, Insider Monkey has discovered a few investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website .

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 let’s take a peek at the key hedge fund action regarding Pinterest, Inc. (NYSE:PINS).

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

Heading into the third quarter of 2021, a total of 63 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -24% from one quarter earlier. By comparison, 53 hedge funds held shares or bullish call options in PINS a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

The largest stake in Pinterest, Inc. (NYSE:PINS) was held by Alkeon Capital Management, which reported holding $356.7 million worth of stock at the end of June. It was followed by Coatue Management with a $294 million position. Other investors bullish on the company included Citadel Investment Group, VGI Partners, and SQN Investors. In terms of the portfolio weights assigned to each position Half Sky Capital allocated the biggest weight to Pinterest, Inc. (NYSE:PINS), around 37.24% of its 13F portfolio. Empirical Capital Partners is also relatively very bullish on the stock, earmarking 15.32 percent of its 13F equity portfolio to PINS.

Because Pinterest, Inc. (NYSE:PINS) has experienced bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few hedgies who were dropping their entire stakes heading into Q3. At the top of the heap, Gabriel Plotkin’s Melvin Capital Management dumped the biggest stake of the “upper crust” of funds watched by Insider Monkey, worth about $310.9 million in stock. Aaron Cowen’s fund, Suvretta Capital Management, also cut its stock, about $104.5 million worth. These transactions are important to note, as total hedge fund interest dropped by 20 funds heading into Q3.

Let’s go over hedge fund activity in other stocks similar to Pinterest, Inc. (NYSE:PINS). These stocks are Keurig Dr Pepper Inc. (NASDAQ:KDP), The Kraft Heinz Company (NASDAQ:KHC), Prudential Public Limited Company (NYSE:PUK), Southern Copper Corporation (NYSE:SCCO), KLA Corporation (NASDAQ:KLAC), America Movil SAB de CV (NYSE:AMX), and América Móvil, S.A.B. de C.V. (NYSE:AMOV). This group of stocks’ market caps are closest to PINS’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $2404 million. That figure was $2915 million in PINS’s case. KLA Corporation (NASDAQ:KLAC) is the most popular stock in this table. On the other hand América Móvil, S.A.B. de C.V. (NYSE:AMOV) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Pinterest, Inc. (NYSE:PINS) is more popular among hedge funds. Our overall hedge fund sentiment score for PINS is 54.9. 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. 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 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. Unfortunately PINS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PINS were disappointed as the stock returned -31.9% since the end of the second quarter (through 9/27) 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 since 2019.

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