Is eBay Inc (EBAY) Going to Burn These Hedge Funds?

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding eBay Inc (NASDAQ:EBAY).

eBay Inc (NASDAQ:EBAY) has seen an increase in hedge fund sentiment recently. eBay Inc (NASDAQ:EBAY) was in 49 hedge funds’ portfolios at the end of September. The all time high for this statistic is 83. Our calculations also showed that EBAY isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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 check out the latest hedge fund action regarding eBay Inc (NASDAQ:EBAY).


Seth Klarman of Baupost Group

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

At third quarter’s end, a total of 49 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 26% from the second quarter of 2021. On the other hand, there were a total of 50 hedge funds with a bullish position in EBAY a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Ako Capital was the largest shareholder of eBay Inc (NASDAQ:EBAY), with a stake worth $512.5 million reported as of the end of September. Trailing Ako Capital was Baupost Group, which amassed a stake valued at $416.8 million. Lyrical Asset Management, Rima Senvest Management, and Nitorum Capital 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 Ivy Lane Capital allocated the biggest weight to eBay Inc (NASDAQ:EBAY), around 8.76% of its 13F portfolio. Brahman Capital is also relatively very bullish on the stock, dishing out 7.71 percent of its 13F equity portfolio to EBAY.

As aggregate interest increased, key hedge funds have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the biggest position in eBay Inc (NASDAQ:EBAY). Balyasny Asset Management had $55.1 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $48.4 million position during the quarter. The following funds were also among the new EBAY investors: Israel Englander’s Millennium Management, Michael Rockefeller and KarláKroeker’s Woodline Partners, and Harry Gail’s Harspring Capital Management.

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 Palantir Technologies Inc. (NYSE:PLTR), The Kraft Heinz Company (NASDAQ:KHC), TE Connectivity Ltd. (NYSE:TEL), Carrier Global Corporation (NYSE:CARR), The Bank of New York Mellon Corporation (NYSE:BK), T. Rowe Price Group, Inc. (NASDAQ:TROW), and Kimberly Clark Corporation (NYSE:KMB). This group of stocks’ market valuations match EBAY’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PLTR 35 1634776 9
KHC 33 12321504 0
TEL 41 2188058 2
CARR 46 1324758 0
BK 46 4657475 -6
TROW 35 471726 11
KMB 28 410445 -9
Average 37.7 3286963 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.7 hedge funds with bullish positions and the average amount invested in these stocks was $3287 million. That figure was $2098 million in EBAY’s case. Carrier Global Corporation (NYSE:CARR) is the most popular stock in this table. On the other hand Kimberly Clark Corporation (NYSE:KMB) is the least popular one with only 28 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 77.7. 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 gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately EBAY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EBAY were disappointed as the stock returned -2.9% since the end of the third quarter (through 11/30) 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 most of these stocks already outperformed the market since 2019.

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