Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards ANGI Homeservices Inc (NASDAQ:ANGI) to find out whether there were any major changes in hedge funds’ views.
Is ANGI a good stock to buy now? ANGI Homeservices Inc (NASDAQ:ANGI) has experienced a decrease in hedge fund interest recently. ANGI Homeservices Inc (NASDAQ:ANGI) was in 42 hedge funds’ portfolios at the end of September. The all time high for this statistic is 48. Our calculations also showed that ANGI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 S&P 500 ETFs by 66 percentage points since March 2017 (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.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. With all of this in mind let’s go over the latest hedge fund action regarding ANGI Homeservices Inc (NASDAQ:ANGI).
Do Hedge Funds Think ANGI Is A Good Stock To Buy Now?
At the end of September, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ANGI over the last 21 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.
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, founded by Jim Simons, holds the biggest position in ANGI Homeservices Inc (NASDAQ:ANGI). Renaissance Technologies has a $46.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Steve Cohen of Point72 Asset Management, with a $33.3 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish comprise Dennis Hong’s ShawSpring Partners, Joshua Nash’s Ulysses Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position ShawSpring Partners allocated the biggest weight to ANGI Homeservices Inc (NASDAQ:ANGI), around 6.12% of its 13F portfolio. Ulysses Management is also relatively very bullish on the stock, designating 3.12 percent of its 13F equity portfolio to ANGI.
Seeing as ANGI Homeservices Inc (NASDAQ:ANGI) has witnessed a decline in interest from the smart money, we can see that there is a sect of hedge funds that slashed their entire stakes in the third quarter. It’s worth mentioning that Alexander Mitchell’s Scopus Asset Management sold off the biggest position of all the hedgies followed by Insider Monkey, totaling about $44.7 million in stock, and Gavin Baker’s Atreides Management was right behind this move, as the fund sold off about $26.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 6 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as ANGI Homeservices Inc (NASDAQ:ANGI) but similarly valued. We will take a look at Hanesbrands Inc. (NYSE:HBI), Emergent Biosolutions Inc (NYSE:EBS), Lincoln Electric Holdings, Inc. (NASDAQ:LECO), Leggett & Platt, Inc. (NYSE:LEG), Clearway Energy, Inc. (NYSE:CWEN), Yamana Gold Inc. (NYSE:AUY), and Plug Power, Inc. (NASDAQ:PLUG). This group of stocks’ market values match ANGI’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 23.6 hedge funds with bullish positions and the average amount invested in these stocks was $324 million. That figure was $349 million in ANGI’s case. Hanesbrands Inc. (NYSE:HBI) is the most popular stock in this table. On the other hand Yamana Gold Inc. (NYSE:AUY) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks ANGI Homeservices Inc (NASDAQ:ANGI) is more popular among hedge funds. Our overall hedge fund sentiment score for ANGI is 75.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Unfortunately ANGI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ANGI were disappointed as the stock returned 5.9% since the end of the third quarter (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.