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Is Shutterstock Inc (SSTK) Going To Burn These Hedge Funds ?

We at Insider Monkey have gone over 730 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of June 28th. In this article, we look at what those funds think of Shutterstock Inc (NYSE:SSTK) based on that data.

Shutterstock Inc (NYSE:SSTK) investors should be aware of an increase in activity from the world’s largest hedge funds recently. SSTK was in 18 hedge funds’ portfolios at the end of June. There were 17 hedge funds in our database with SSTK holdings at the end of the previous quarter. Our calculations also showed that SSTK isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

SSTK_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to view the latest hedge fund action surrounding Shutterstock Inc (NYSE:SSTK).

How have hedgies been trading Shutterstock Inc (NYSE:SSTK)?

At Q2’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in SSTK a year ago. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

COATUE MANAGEMENT

More specifically, Renaissance Technologies was the largest shareholder of Shutterstock Inc (NYSE:SSTK), with a stake worth $32.6 million reported as of the end of March. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $21.1 million. Arrowstreet Capital, Two Sigma Advisors, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.

Consequently, specific money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the biggest position in Shutterstock Inc (NYSE:SSTK). Marshall Wace LLP had $4.1 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0.9 million position during the quarter. The other funds with brand new SSTK positions are Dmitry Balyasny’s Balyasny Asset Management, David Harding’s Winton Capital Management, and Philippe Laffont’s Coatue Management.

Let’s go over hedge fund activity in other stocks similar to Shutterstock Inc (NYSE:SSTK). We will take a look at Career Education Corp. (NASDAQ:CECO), Viad Corp (NYSE:VVI), B&G Foods, Inc. (NYSE:BGS), and Virtusa Corporation (NASDAQ:VRTU). All of these stocks’ market caps match SSTK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CECO 22 216393 0
VVI 16 120247 3
BGS 20 121608 1
VRTU 13 56606 3
Average 17.75 128714 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $129 million. That figure was $89 million in SSTK’s case. Career Education Corp. (NASDAQ:CECO) is the most popular stock in this table. On the other hand Virtusa Corporation (NASDAQ:VRTU) is the least popular one with only 13 bullish hedge fund positions. Shutterstock Inc (NYSE:SSTK) is not the most popular stock in this group but hedge fund interest is still above average. 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately SSTK wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SSTK were disappointed as the stock returned -7.8% during the third quarter 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.

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