In this article we will check out the progression of hedge fund sentiment towards Shutterstock Inc (NYSE:SSTK) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is SSTK a good stock to buy now? Shutterstock Inc (NYSE:SSTK) shareholders have witnessed an increase in activity from the world’s largest hedge funds recently. Shutterstock Inc (NYSE:SSTK) was in 19 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that SSTK 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.
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 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let’s go over the key hedge fund action regarding Shutterstock Inc (NYSE:SSTK).
Do Hedge Funds Think SSTK Is A Good Stock To Buy Now?
At the end of September, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SSTK over the last 21 quarters. So, let’s find out 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, Renaissance Technologies, holds the biggest position in Shutterstock Inc (NYSE:SSTK). Renaissance Technologies has a $66.9 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is D. E. Shaw of D E Shaw, with a $27.3 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism consist of Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, John Overdeck and David Siegel’s Two Sigma Advisors and Jack Ripsteen’s Potrero Capital Research. In terms of the portfolio weights assigned to each position Potrero Capital Research allocated the biggest weight to Shutterstock Inc (NYSE:SSTK), around 1.56% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, setting aside 0.5 percent of its 13F equity portfolio to SSTK.
Now, key hedge funds have jumped into Shutterstock Inc (NYSE:SSTK) headfirst. Potrero Capital Research, managed by Jack Ripsteen, established the biggest position in Shutterstock Inc (NYSE:SSTK). Potrero Capital Research had $4.8 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $1.3 million position during the quarter. The other funds with brand new SSTK positions are Dmitry Balyasny’s Balyasny Asset Management, Lee Ainslie’s Maverick Capital, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Shutterstock Inc (NYSE:SSTK) but similarly valued. These stocks are Bottomline Technologies (de), Inc. (NASDAQ:EPAY), 21Vianet Group Inc (NASDAQ:VNET), Asbury Automotive Group, Inc. (NYSE:ABG), First Hawaiian, Inc. (NASDAQ:FHB), Daqo New Energy Corp (NYSE:DQ), Comfort Systems USA, Inc. (NYSE:FIX), and Fitbit Inc (NYSE:FIT). This group of stocks’ market caps are similar to SSTK’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 24.3 hedge funds with bullish positions and the average amount invested in these stocks was $240 million. That figure was $131 million in SSTK’s case. Fitbit Inc (NYSE:FIT) is the most popular stock in this table. On the other hand Daqo New Energy Corp (NYSE:DQ) is the least popular one with only 18 bullish hedge fund positions. Shutterstock Inc (NYSE:SSTK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for SSTK is 41.6. 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 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on SSTK as the stock returned 28.5% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.