In this article we will take a look at whether hedge funds think Fitbit Inc (NYSE:FIT) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is FIT a good stock to buy? Fitbit Inc (NYSE:FIT) investors should be aware of an increase in hedge fund interest of late. Fitbit Inc (NYSE:FIT) was in 32 hedge funds’ portfolios at the end of September. The all time high for this statistic is 35. There were 30 hedge funds in our database with FIT positions at the end of the second quarter. Our calculations also showed that FIT 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In the eyes of most investors, hedge funds are viewed as unimportant, outdated financial tools of yesteryear. While there are more than 8000 funds with their doors open today, We hone in on the leaders of this club, about 850 funds. Most estimates calculate that this group of people handle the majority of all hedge funds’ total asset base, and by following their top stock picks, Insider Monkey has found numerous investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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Do Hedge Funds Think FIT Is A Good Stock To Buy Now?
At third quarter’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FIT over the last 21 quarters. So, let’s check out 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, Alec Litowitz and Ross Laser’s Magnetar Capital has the biggest position in Fitbit Inc (NYSE:FIT), worth close to $76.7 million, corresponding to 1.4% of its total 13F portfolio. Sitting at the No. 2 spot is Alpine Associates, managed by Robert Emil Zoellner, which holds a $57.9 million position; 3% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions include Matthew Halbower’s Pentwater Capital Management, Carl Tiedemann and Michael Tiedemann’s TIG Advisors and Simon Sadler’s Segantii Capital. In terms of the portfolio weights assigned to each position Litespeed Management allocated the biggest weight to Fitbit Inc (NYSE:FIT), around 4.89% of its 13F portfolio. Halcyon Asset Management is also relatively very bullish on the stock, earmarking 3.31 percent of its 13F equity portfolio to FIT.
Consequently, some big names have been driving this bullishness. Segantii Capital, managed by Simon Sadler, established the most outsized position in Fitbit Inc (NYSE:FIT). Segantii Capital had $28.9 million invested in the company at the end of the quarter. Steven Clark’s Omni Partners also made a $19.7 million investment in the stock during the quarter. The other funds with brand new FIT positions are John Bader’s Halcyon Asset Management, Donald Sussman’s Paloma Partners, and Greg Eisner’s Engineers Gate Manager.
Let’s check out hedge fund activity in other stocks similar to Fitbit Inc (NYSE:FIT). We will take a look at Nordstrom, Inc. (NYSE:JWN), Veracyte Inc (NASDAQ:VCYT), Cal-Maine Foods Inc (NASDAQ:CALM), KAR Auction Services Inc (NYSE:KAR), Aurinia Pharmaceuticals Inc (NASDAQ:AUPH), Methanex Corporation (NASDAQ:MEOH), and CareDx, Inc. (NASDAQ:CDNA). This group of stocks’ market caps are closest to FIT’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 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $222 million. That figure was $426 million in FIT’s case. KAR Auction Services Inc (NYSE:KAR) is the most popular stock in this table. On the other hand Veracyte Inc (NASDAQ:VCYT) is the least popular one with only 12 bullish hedge fund positions. Fitbit Inc (NYSE:FIT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FIT is 68.9. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 33.3% in 2020 through December 18th and beat the market again by 16.4 percentage points. Unfortunately FIT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on FIT were disappointed as the stock returned 4.2% since the end of September (through 12/18) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.