In this article we will take a look at whether hedge funds think Wix.Com Ltd (NASDAQ:WIX) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is WIX a good stock to buy now? Wix.Com Ltd (NASDAQ:WIX) investors should be aware of an increase in hedge fund sentiment of late. Wix.Com Ltd (NASDAQ:WIX) was in 36 hedge funds’ portfolios at the end of September. The all time high for this statistic is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that WIX 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 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 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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 15 best blue chip stocks to buy 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. Keeping this in mind we’re going to take a gander at the key hedge fund action encompassing Wix.Com Ltd (NASDAQ:WIX).
Do Hedge Funds Think WIX Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WIX 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.
When looking at the institutional investors followed by Insider Monkey, Robert Pitts’s Steadfast Capital Management has the number one position in Wix.Com Ltd (NASDAQ:WIX), worth close to $361.9 million, corresponding to 4% of its total 13F portfolio. Coming in second is Renaissance Technologies, which holds a $202 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Amish Mehta’s SQN Investors and Kevin Oram and Peter Uddo’s Praesidium Investment Management Company. In terms of the portfolio weights assigned to each position Blackcrane Capital allocated the biggest weight to Wix.Com Ltd (NASDAQ:WIX), around 24.74% of its 13F portfolio. Noked Capital is also relatively very bullish on the stock, setting aside 10.81 percent of its 13F equity portfolio to WIX.
With a general bullishness amongst the heavyweights, some big names have jumped into Wix.Com Ltd (NASDAQ:WIX) headfirst. Millennium Management, managed by Israel Englander, assembled the largest position in Wix.Com Ltd (NASDAQ:WIX). Millennium Management had $13.5 million invested in the company at the end of the quarter. Michael Blitzer’s Kingstown Capital Management also initiated a $8.3 million position during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Donald Sussman’s Paloma Partners, and Jinghua Yan’s TwinBeech Capital.
Let’s check out hedge fund activity in other stocks similar to Wix.Com Ltd (NASDAQ:WIX). These stocks are PerkinElmer, Inc. (NYSE:PKI), Tyler Technologies, Inc. (NYSE:TYL), Nomura Holdings, Inc. (NYSE:NMR), Royal Caribbean Group (NYSE:RCL), Sun Communities Inc (NYSE:SUI), Extra Space Storage, Inc. (NYSE:EXR), and BioMarin Pharmaceutical Inc. (NASDAQ:BMRN). This group of stocks’ market valuations are similar to WIX’s market valuation.
|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 29.3 hedge funds with bullish positions and the average amount invested in these stocks was $702 million. That figure was $1105 million in WIX’s case. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is the most popular stock in this table. On the other hand Nomura Holdings, Inc. (NYSE:NMR) is the least popular one with only 6 bullish hedge fund positions. Wix.Com Ltd (NASDAQ:WIX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WIX is 79.5. 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. 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and beat the market again by 16.4 percentage points. Unfortunately WIX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on WIX were disappointed as the stock returned 7.3% since the end of September (through 12/18) 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.
Follow Wix.com Ltd. (NASDAQ:WIX)
Follow Wix.com Ltd. (NASDAQ:WIX)
Disclosure: None. This article was originally published at Insider Monkey.