The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their December 31 holdings, data that is available nowhere else. Should you consider Farfetch Limited (NYSE:FTCH) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to take a glance at the recent hedge fund action surrounding Farfetch Limited (NYSE:FTCH).
What have hedge funds been doing with Farfetch Limited (NYSE:FTCH)?
At Q4’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -36% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FTCH over the last 14 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Farfetch Limited (NYSE:FTCH) was held by Light Street Capital, which reported holding $39.8 million worth of stock at the end of September. It was followed by Joho Capital with a $37.7 million position. Other investors bullish on the company included D1 Capital Partners, Alkeon Capital Management, and GLG Partners.
Due to the fact that Farfetch Limited (NYSE:FTCH) has faced a decline in interest from hedge fund managers, logic holds that there is a sect of money managers that decided to sell off their positions entirely in the third quarter. Intriguingly, Alex Sacerdote’s Whale Rock Capital Management dumped the biggest position of all the hedgies monitored by Insider Monkey, valued at about $19.1 million in stock, and Phill Gross and Robert Atchinson’s Adage Capital Management was right behind this move, as the fund cut about $16.3 million worth. These transactions are important to note, as total hedge fund interest was cut by 10 funds in the third quarter.
Let’s check out hedge fund activity in other stocks similar to Farfetch Limited (NYSE:FTCH). These stocks are Moderna, Inc. (NASDAQ:MRNA), The Trade Desk, Inc. (NASDAQ:TTD), Reliance Steel & Aluminum Co. (NYSE:RS), and First American Financial Corp (NYSE:FAF). This group of stocks’ market values are similar to FTCH’s market value.
|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 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $335 million. That figure was $165 million in FTCH’s case. First American Financial Corp (NYSE:FAF) is the most popular stock in this table. On the other hand The Trade Desk, Inc. (NASDAQ:TTD) is the least popular one with only 16 bullish hedge fund positions. Farfetch Limited (NYSE:FTCH) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on FTCH as the stock returned 32.7% and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.