We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31st. We at Insider Monkey have made an extensive database of more than 835 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Match Group, Inc. (NASDAQ:MTCH) based on those filings.
Match Group, Inc. (NASDAQ:MTCH) was in 32 hedge funds’ portfolios at the end of the fourth quarter of 2019. MTCH shareholders have witnessed a decrease in support from the world’s most elite money managers of late. There were 44 hedge funds in our database with MTCH holdings at the end of the previous quarter. Our calculations also showed that MTCH isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
John Armitage of Egerton Capital
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a glance at the new hedge fund action regarding Match Group, Inc. (NASDAQ:MTCH).
How have hedgies been trading Match Group, Inc. (NASDAQ:MTCH)?
At Q4’s end, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -27% from the third quarter of 2019. On the other hand, there were a total of 24 hedge funds with a bullish position in MTCH a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Lone Pine Capital was the largest shareholder of Match Group, Inc. (NASDAQ:MTCH), with a stake worth $249.4 million reported as of the end of September. Trailing Lone Pine Capital was Whale Rock Capital Management, which amassed a stake valued at $150.3 million. Light Street Capital, Renaissance Technologies, and Arrowstreet 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 Light Street Capital allocated the biggest weight to Match Group, Inc. (NASDAQ:MTCH), around 4.66% of its 13F portfolio. Black-and-White Capital is also relatively very bullish on the stock, designating 4.4 percent of its 13F equity portfolio to MTCH.
Since Match Group, Inc. (NASDAQ:MTCH) has faced a decline in interest from hedge fund managers, logic holds that there exists a select few funds who were dropping their entire stakes heading into Q4. Interestingly, Edmond M. Safra’s EMS Capital dumped the largest investment of all the hedgies watched by Insider Monkey, valued at an estimated $39.1 million in stock, and James Crichton’s Hitchwood Capital Management was right behind this move, as the fund dumped about $35 million worth. These moves are interesting, as aggregate hedge fund interest fell by 12 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to Match Group, Inc. (NASDAQ:MTCH). These stocks are Fox Corporation (NASDAQ:FOXA), Snap Inc. (NYSE:SNAP), Liberty Broadband Corp (NASDAQ:LBRDK), and AMETEK, Inc. (NYSE:AME). This group of stocks’ market valuations are similar to MTCH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FOXA | 37 | 2451723 | -14 |
| SNAP | 66 | 2388937 | 12 |
| LBRDK | 46 | 4094159 | 2 |
| AME | 32 | 809768 | -1 |
| Average | 45.25 | 2436147 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 45.25 hedge funds with bullish positions and the average amount invested in these stocks was $2436 million. That figure was $1073 million in MTCH’s case. Snap Inc. (NYSE:SNAP) is the most popular stock in this table. On the other hand AMETEK, Inc. (NYSE:AME) is the least popular one with only 32 bullish hedge fund positions. Compared to these stocks Match Group, Inc. (NASDAQ:MTCH) is even less popular than AME. Hedge funds dodged a bullet by taking a bearish stance towards MTCH. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 11.7% in 2020 through March 11th but managed to beat the market by 3.1 percentage points. Unfortunately MTCH wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MTCH investors were disappointed as the stock returned -23.2% during the same time period 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 so far in Q1.
Disclosure: None. This article was originally published at Insider Monkey.
