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 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider eBay Inc (NASDAQ:EBAY) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is EBAY a good stock to buy? eBay Inc (NASDAQ:EBAY) has seen a decrease in activity from the world’s largest hedge funds of late. eBay Inc (NASDAQ:EBAY) was in 50 hedge funds’ portfolios at the end of September. The all time high for this statistics is 83. There were 58 hedge funds in our database with EBAY holdings at the end of June. Our calculations also showed that EBAY 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.
In the financial world there are a lot of gauges investors put to use to appraise stocks. A duo of the less known gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can trounce the market by a very impressive margin (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. Now let’s take a look at the recent hedge fund action encompassing eBay Inc (NASDAQ:EBAY).
Hedge fund activity in eBay Inc (NASDAQ:EBAY)
Heading into the fourth quarter of 2020, a total of 50 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the second quarter of 2020. On the other hand, there were a total of 59 hedge funds with a bullish position in EBAY a year ago. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
The largest stake in eBay Inc (NASDAQ:EBAY) was held by Baupost Group, which reported holding $1569 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $669.5 million position. Other investors bullish on the company included Elliott Investment Management, Ako Capital, and AQR Capital Management. In terms of the portfolio weights assigned to each position Baupost Group allocated the biggest weight to eBay Inc (NASDAQ:EBAY), around 16.96% of its 13F portfolio. Rima Senvest Management is also relatively very bullish on the stock, earmarking 8.98 percent of its 13F equity portfolio to EBAY.
Judging by the fact that eBay Inc (NASDAQ:EBAY) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there was a specific group of funds that slashed their positions entirely by the end of the third quarter. It’s worth mentioning that Jeffrey Smith’s Starboard Value LP cut the largest investment of the 750 funds tracked by Insider Monkey, totaling an estimated $109.6 million in stock, and Michael Rockefeller and KarláKroeker’s Woodline Partners was right behind this move, as the fund dropped about $48.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 8 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 eBay Inc (NASDAQ:EBAY) but similarly valued. We will take a look at Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), Xcel Energy Inc (NYSE:XEL), The Blackstone Group Inc. (NYSE:BX), SBA Communications Corporation (NASDAQ:SBAC), Las Vegas Sands Corp. (NYSE:LVS), Baidu, Inc. (NASDAQ:BIDU), and Ambev SA (NYSE:ABEV). All of these stocks’ market caps match EBAY’s market cap.
|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 35.4 hedge funds with bullish positions and the average amount invested in these stocks was $1294 million. That figure was $4887 million in EBAY’s case. The Blackstone Group Inc. (NYSE:BX) is the most popular stock in this table. On the other hand Ambev SA (NYSE:ABEV) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks eBay Inc (NASDAQ:EBAY) is more popular among hedge funds. Our overall hedge fund sentiment score for EBAY is 65.1. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Unfortunately EBAY wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on EBAY were disappointed as the stock returned -1.1% since the end of the third quarter (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 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.