How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding eBay Inc (NASDAQ:EBAY).
Is EBAY stock a buy or sell? eBay Inc (NASDAQ:EBAY) shareholders have witnessed an increase in support from the world’s most elite money managers lately. eBay Inc (NASDAQ:EBAY) was in 53 hedge funds’ portfolios at the end of December. 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 Q4 rankings).
Today there are many indicators shareholders use to value stocks. A pair of the most useful indicators are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform their index-focused peers by a very impressive amount (see the details here).
At Insider Monkey we leave no stone unturned when looking for 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 hydrogen fuel cell 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 (or at the end of this article). Keeping this in mind we’re going to check out the new hedge fund action surrounding eBay Inc (NASDAQ:EBAY).
Do Hedge Funds Think EBAY Is A Good Stock To Buy Now?
At Q4’s end, a total of 53 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from one quarter earlier. On the other hand, there were a total of 51 hedge funds with a bullish position in EBAY a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Seth Klarman’s Baupost Group has the most valuable position in eBay Inc (NASDAQ:EBAY), worth close to $1.5635 billion, amounting to 14.4% of its total 13F portfolio. Coming in second is Nicolai Tangen of Ako Capital, with a $552.2 million position; the fund has 7.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions contain Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Seth Rosen’s Nitorum Capital. In terms of the portfolio weights assigned to each position Baupost Group allocated the biggest weight to eBay Inc (NASDAQ:EBAY), around 14.43% of its 13F portfolio. Brahman Capital is also relatively very bullish on the stock, earmarking 8.41 percent of its 13F equity portfolio to EBAY.
Consequently, some big names have jumped into eBay Inc (NASDAQ:EBAY) headfirst. Levin Easterly Partners, managed by John Murphy, established the largest position in eBay Inc (NASDAQ:EBAY). Levin Easterly Partners had $21.2 million invested in the company at the end of the quarter. Nicholas Bagnall’s Te Ahumairangi Investment Management also made a $10.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Schonfeld Strategic Advisors, Michael Gelband’s ExodusPoint Capital, and Frank Fu’s CaaS Capital.
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 Lufax Holding Ltd (NYSE:LU), Manulife Financial Corporation (NYSE:MFC), Walgreens Boots Alliance Inc (NASDAQ:WBA), Palo Alto Networks Inc (NYSE:PANW), IQVIA Holdings, Inc. (NYSE:IQV), T. Rowe Price Group, Inc. (NASDAQ:TROW), and Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN). This group of stocks’ market caps are closest to 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 44.1 hedge funds with bullish positions and the average amount invested in these stocks was $2296 million. That figure was $4010 million in EBAY’s case. Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is the most popular stock in this table. On the other hand Lufax Holding Ltd (NYSE:LU) is the least popular one with only 11 bullish hedge fund positions. eBay Inc (NASDAQ:EBAY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EBAY is 59. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on EBAY as the stock returned 19.2% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.