Is STMP Stock A Buy or Sell?

In this article we will analyze whether Inc. (NASDAQ:STMP) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is STMP stock a buy or sell? Prominent investors were buying. The number of long hedge fund bets went up by 7 lately. Inc. (NASDAQ:STMP) was in 38 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 38. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that STMP isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).


Ken Fisher of Fisher Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 we’re going to take a gander at the latest hedge fund action encompassing Inc. (NASDAQ:STMP).

Do Hedge Funds Think STMP Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 38 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 23% from the previous quarter. By comparison, 20 hedge funds held shares or bullish call options in STMP a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

More specifically, Fisher Asset Management was the largest shareholder of Inc. (NASDAQ:STMP), with a stake worth $120.4 million reported as of the end of December. Trailing Fisher Asset Management was D E Shaw, which amassed a stake valued at $84.8 million. Simcoe Capital Management, Renaissance Technologies, and No Street 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 Simcoe Capital Management allocated the biggest weight to Inc. (NASDAQ:STMP), around 8.37% of its 13F portfolio. Calixto Global Investors is also relatively very bullish on the stock, designating 7.32 percent of its 13F equity portfolio to STMP.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Calixto Global Investors, managed by Eduardo Costa, initiated the largest position in Inc. (NASDAQ:STMP). Calixto Global Investors had $15.5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $12.6 million position during the quarter. The other funds with brand new STMP positions are Ben Gordon’s Blue Grotto Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Greg Eisner’s Engineers Gate Manager.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Inc. (NASDAQ:STMP) but similarly valued. We will take a look at Colliers International Group Inc (NASDAQ:CIGI), CareDx, Inc. (NASDAQ:CDNA), Armstrong World Industries, Inc. (NYSE:AWI), The Brink’s Company (NYSE:BCO), ShockWave Medical, Inc. (NASDAQ:SWAV), Cohen & Steers, Inc. (NYSE:CNS), and DouYu International Holdings Limited (NASDAQ:DOYU). This group of stocks’ market caps resemble STMP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CIGI 11 792298 1
CDNA 20 613805 -5
AWI 31 458470 1
BCO 26 413476 -2
SWAV 22 168832 6
CNS 15 76253 -7
DOYU 27 237774 4
Average 21.7 394415 -0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $394 million. That figure was $577 million in STMP’s case. Armstrong World Industries, Inc. (NYSE:AWI) is the most popular stock in this table. On the other hand Colliers International Group Inc (NASDAQ:CIGI) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Inc. (NASDAQ:STMP) is more popular among hedge funds. Our overall hedge fund sentiment score for STMP is 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Unfortunately STMP wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on STMP were disappointed as the stock returned -1.1% since the end of the fourth quarter (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.