Is Mercadolibre Inc (MELI) A Good Stock To Buy?

Judging by the fact that Mercadolibre Inc (NASDAQ:MELI) has experienced a declination in interest from the aggregate hedge fund industry, logic holds that there exists a select few money managers who sold off their full holdings in the third quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dropped the largest investment of the “upper crust” of funds tracked by Insider Monkey, totaling close to $14.5 million in stock. Richard Driehaus’s fund, Driehaus Capital, also said goodbye to its stock, about $12 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to Mercadolibre Inc (NASDAQ:MELI). These stocks are IPG Photonics Corporation (NASDAQ:IPGP), Casey’s General Stores, Inc. (NASDAQ:CASY), Pitney Bowes Inc. (NYSE:PBI), and Intercept Pharmaceuticals Inc (NASDAQ:ICPT). This group of stocks’ market caps are similar to MELI’s market cap.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $322 million, versus $286 million in MELI’s case. IPG Photonics Corporation (NASDAQ:IPGP) is the most popular stock in this table. On the other hand Intercept Pharmaceuticals Inc (NASDAQ:ICPT) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Mercadolibre Inc (NASDAQ:MELI) is even less popular than ICPT. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is required.