Hedge Funds Can’t Buy Enough Of Cardlytics, Inc. (CDLX)

In this article we are going to use hedge fund sentiment as a tool and determine whether Cardlytics, Inc. (NASDAQ:CDLX) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Cardlytics, Inc. (NASDAQ:CDLX) shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. Cardlytics, Inc. (NASDAQ:CDLX) was in 38 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 32. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 32 hedge funds in our database with CDLX holdings at the end of December. Our calculations also showed that CDLX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

To most shareholders, hedge funds are assumed to be unimportant, old investment tools of the past. While there are greater than 8000 funds in operation at the moment, Our experts look at the elite of this club, around 850 funds. These investment experts direct the majority of the hedge fund industry’s total capital, and by paying attention to their matchless equity investments, Insider Monkey has uncovered various investment strategies that have historically outrun the broader indices. Insider Monkey’s flagship short hedge fund strategy outstripped 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 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 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 battery 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. Keeping this in mind let’s review the latest hedge fund action encompassing Cardlytics, Inc. (NASDAQ:CDLX).

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

At the end of the first quarter, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CDLX over the last 23 quarters. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

More specifically, CAS Investment Partners was the largest shareholder of Cardlytics, Inc. (NASDAQ:CDLX), with a stake worth $492.4 million reported as of the end of March. Trailing CAS Investment Partners was Alua Capital Management, which amassed a stake valued at $128.4 million. Antipodean Advisors, JS Capital, and 683 Capital Partners 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 CAS Investment Partners allocated the biggest weight to Cardlytics, Inc. (NASDAQ:CDLX), around 25.16% of its 13F portfolio. Antipodean Advisors is also relatively very bullish on the stock, dishing out 21.66 percent of its 13F equity portfolio to CDLX.

As aggregate interest increased, specific money managers have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, created the most valuable position in Cardlytics, Inc. (NASDAQ:CDLX). Citadel Investment Group had $29 million invested in the company at the end of the quarter. Sheetal Sharma’s Collaborative Holdings Management also made a $7.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Rob Citrone’s Discovery Capital Management, Peter Muller’s PDT Partners, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s go over hedge fund activity in other stocks similar to Cardlytics, Inc. (NASDAQ:CDLX). These stocks are Corsair Gaming, Inc. (NASDAQ:CRSR), Clover Health Investments, Corp. (NASDAQ:CLOV), Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), Seer, Inc. (NASDAQ:SEER), Poshmark, Inc. (NASDAQ:POSH), Hecla Mining Company (NYSE:HL), and Momo Inc (NASDAQ:MOMO). This group of stocks’ market caps are closest to CDLX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $289 million. That figure was $1013 million in CDLX’s case. Kulicke and Soffa Industries Inc. (NASDAQ:KLIC) is the most popular stock in this table. On the other hand Corsair Gaming, Inc. (NASDAQ:CRSR) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Cardlytics, Inc. (NASDAQ:CDLX) is more popular among hedge funds. Our overall hedge fund sentiment score for CDLX is 90. 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 returned 19.3% in 2021 through June 25th but still managed to beat the market by 4.8 percentage points. Hedge funds were also right about betting on CDLX as the stock returned 15.8% since the end of March (through 6/25) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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