Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Farfetch Limited (NYSE:FTCH)? The smart money sentiment can provide an answer to this question.
Is FTCH stock a buy or sell? Farfetch Limited (NYSE:FTCH) was in 47 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 43. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. FTCH investors should pay attention to an increase in activity from the world’s largest hedge funds of late. There were 40 hedge funds in our database with FTCH positions at the end of the third quarter. Our calculations also showed that FTCH isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. Recently Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. We go through lists like the 10 best biotech stocks to invest in to pick the next stock 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 let’s check out the key hedge fund action encompassing Farfetch Limited (NYSE:FTCH).
Do Hedge Funds Think FTCH Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FTCH over the last 22 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Lone Pine Capital, holds the number one position in Farfetch Limited (NYSE:FTCH). Lone Pine Capital has a $514.6 million position in the stock, comprising 1.9% of its 13F portfolio. The second largest stake is held by Tybourne Capital Management, managed by Eashwar Krishnan, which holds a $341.7 million position; the fund has 7.1% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions include Brad Gerstner’s Altimeter Capital Management, Renaissance Technologies and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Kuvari Partners allocated the biggest weight to Farfetch Limited (NYSE:FTCH), around 16.92% of its 13F portfolio. One01 Capital is also relatively very bullish on the stock, earmarking 8.62 percent of its 13F equity portfolio to FTCH.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Lone Pine Capital, established the most outsized position in Farfetch Limited (NYSE:FTCH). Lone Pine Capital had $514.6 million invested in the company at the end of the quarter. Alex Sacerdote’s Whale Rock Capital Management also initiated a $182.5 million position during the quarter. The other funds with new positions in the stock are Gaurav Kapadia’s XN Exponent Advisors, Vikram Kumar’s Kuvari Partners, and Gavin Baker’s Atreides Management.
Let’s now take a look at hedge fund activity in other stocks similar to Farfetch Limited (NYSE:FTCH). These stocks are PPL Corporation (NYSE:PPL), Church & Dwight Co., Inc. (NYSE:CHD), MarketAxess Holdings Inc. (NASDAQ:MKTX), MongoDB, Inc. (NASDAQ:MDB), Baker Hughes Company (NYSE:BKR), Kellogg Company (NYSE:K), and Telefonica S.A. (NYSE:TEF). This group of stocks’ market caps are closest to FTCH’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 29.4 hedge funds with bullish positions and the average amount invested in these stocks was $801 million. That figure was $3035 million in FTCH’s case. Church & Dwight Co., Inc. (NYSE:CHD) is the most popular stock in this table. On the other hand Telefonica S.A. (NYSE:TEF) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Farfetch Limited (NYSE:FTCH) is more popular among hedge funds. Our overall hedge fund sentiment score for FTCH is 90. 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. Unfortunately FTCH wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on FTCH were disappointed as the stock returned -6.2% since the end of the fourth quarter (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 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.