The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Stamps.com Inc. (NASDAQ:STMP).
Stamps.com Inc. (NASDAQ:STMP) was in 32 hedge funds’ portfolios at the end of March. The all time high for this statistic is 38. STMP has seen a decrease in enthusiasm from smart money recently. There were 38 hedge funds in our database with STMP positions at the end of the fourth quarter. Our calculations also showed that STMP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
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 peek at the recent hedge fund action surrounding Stamps.com Inc. (NASDAQ:STMP).
Do Hedge Funds Think STMP Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from the fourth quarter of 2020. By comparison, 29 hedge funds held shares or bullish call options in STMP a year ago. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in Stamps.com Inc. (NASDAQ:STMP) was held by Simcoe Capital Management, which reported holding $119.4 million worth of stock at the end of December. It was followed by Fisher Asset Management with a $117 million position. Other investors bullish on the company included Vista Equity Partners, D E Shaw, and Harspring Capital Management. In terms of the portfolio weights assigned to each position Simcoe Capital Management allocated the biggest weight to Stamps.com Inc. (NASDAQ:STMP), around 15.2% of its 13F portfolio. Harspring Capital Management is also relatively very bullish on the stock, designating 9.34 percent of its 13F equity portfolio to STMP.
Due to the fact that Stamps.com Inc. (NASDAQ:STMP) has experienced bearish sentiment from hedge fund managers, logic holds that there exists a select few hedgies that decided to sell off their full holdings in the first quarter. Intriguingly, Spencer M. Waxman’s Shannon River Fund Management said goodbye to the largest position of all the hedgies monitored by Insider Monkey, worth close to $30.7 million in stock. Mark Coe’s fund, Intrinsic Edge Capital, also dropped its stock, about $21.4 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 6 funds in the first quarter.
Let’s go over hedge fund activity in other stocks similar to Stamps.com Inc. (NASDAQ:STMP). These stocks are AAON, Inc. (NASDAQ:AAON), Sabra Health Care REIT Inc (NASDAQ:SBRA), Ameris Bancorp (NASDAQ:ABCB), Franklin Electric Co., Inc. (NASDAQ:FELE), Univar Solutions Inc (NYSE:UNVR), Nektar Therapeutics (NASDAQ:NKTR), and Desktop Metal, Inc. (NYSE:DM). This group of stocks’ market valuations are similar to STMP’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $238 million. That figure was $578 million in STMP’s case. Univar Solutions Inc (NYSE:UNVR) is the most popular stock in this table. On the other hand AAON, Inc. (NASDAQ:AAON) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Stamps.com Inc. (NASDAQ:STMP) is more popular among hedge funds. Our overall hedge fund sentiment score for STMP is 74.3. 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 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Unfortunately STMP wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on STMP were disappointed as the stock returned -0.2% since the end of the first quarter (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 since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.