Hedge Funds Aren’t Crazy About Wix.Com Ltd (WIX) Anymore

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Wix.Com Ltd (NASDAQ:WIX).

Is Wix.Com Ltd (NASDAQ:WIX) a buy here? The best stock pickers were turning less bullish. The number of long hedge fund bets dropped by 10 in recent months. Wix.Com Ltd (NASDAQ:WIX) was in 25 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 40. Our calculations also showed that WIX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 35 hedge funds in our database with WIX holdings at the end of June.

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. Now we’re going to go over the key hedge fund action encompassing Wix.Com Ltd (NASDAQ:WIX).

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

At third quarter’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from one quarter earlier. By comparison, 36 hedge funds held shares or bullish call options in WIX a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Among these funds, Steadfast Capital Management held the most valuable stake in Wix.Com Ltd (NASDAQ:WIX), which was worth $299.5 million at the end of the third quarter. On the second spot was Marcho Partners which amassed $173.1 million worth of shares. Fisher Asset Management, Praesidium Investment Management Company, and SQN Investors 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 Blackcrane Capital allocated the biggest weight to Wix.Com Ltd (NASDAQ:WIX), around 14.29% of its 13F portfolio. Marcho Partners is also relatively very bullish on the stock, dishing out 10.86 percent of its 13F equity portfolio to WIX.

Due to the fact that Wix.Com Ltd (NASDAQ:WIX) has faced falling interest from hedge fund managers, logic holds that there exists a select few hedge funds who were dropping their entire stakes by the end of the third quarter. Intriguingly, Zach Schreiber’s Point State Capital dumped the largest investment of all the hedgies followed by Insider Monkey, worth close to $149.4 million in stock. Jonathan Auerbach’s fund, Hound Partners, also dumped its stock, about $79.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 10 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Wix.Com Ltd (NASDAQ:WIX) but similarly valued. These stocks are ironSource Ltd. (NYSE:IS), East West Bancorp, Inc. (NASDAQ:EWBC), Cable One Inc (NYSE:CABO), Lennox International Inc. (NYSE:LII), Formula One Group (NASDAQ:FWONA), Gaming and Leisure Properties Inc (NASDAQ:GLPI), and Weibo Corp (NASDAQ:WB). This group of stocks’ market valuations resemble WIX’s market valuation.

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As you can see these stocks had an average of 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $457 million. That figure was $741 million in WIX’s case. ironSource Ltd. (NYSE:IS) is the most popular stock in this table. On the other hand Weibo Corp (NASDAQ:WB) is the least popular one with only 14 bullish hedge fund positions. Wix.Com Ltd (NASDAQ:WIX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WIX is 50.4. 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 positive signal but 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately WIX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on WIX were disappointed as the stock returned -22.1% since the end of September (through 12/9) 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 many of these stocks already outperformed the market since 2019.

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