After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Zillow Group Inc (NASDAQ:Z).
Is Zillow Group Inc (NASDAQ:Z) a good stock to buy now? Zillow investors should pay attention to an increase in enthusiasm from smart money in recent months. Zillow Group Inc (NASDAQ:Z) was in 69 hedge funds’ portfolios at the end of September. The all time high for this statistics is 59. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that Z 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.
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 was 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’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 leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium 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. With all of this in mind we’re going to analyze the new hedge fund action encompassing Zillow Group Inc (NASDAQ:Z).
What does smart money think about Zillow Group Inc (NASDAQ:Z)?
At Q3’s end, a total of 69 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the previous quarter. On the other hand, there were a total of 42 hedge funds with a bullish position in Z a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, SRS Investment Management, managed by Karthik Sarma, holds the number one position in Zillow Group Inc (NASDAQ:Z). SRS Investment Management has a $870.9 million position in the stock, comprising 16.1% of its 13F portfolio. The second largest stake is held by Philippe Laffont of Coatue Management, with a $311.5 million position; 1.6% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions encompass Nancy Zevenbergen’s Zevenbergen Capital Investments, Christopher R. Hansen’s Valiant Capital and Ricky Sandler’s Eminence Capital. In terms of the portfolio weights assigned to each position Thrive Capital allocated the biggest weight to Zillow Group Inc (NASDAQ:Z), around 20.58% of its 13F portfolio. Ancient Art (Teton Capital) is also relatively very bullish on the stock, designating 17.69 percent of its 13F equity portfolio to Z.
With a general bullishness amongst the heavyweights, key money managers have jumped into Zillow Group Inc (NASDAQ:Z) headfirst. Coatue Management, managed by Philippe Laffont, created the most valuable position in Zillow Group Inc (NASDAQ:Z). Coatue Management had $311.5 million invested in the company at the end of the quarter. Philippe Laffont’s Coatue Management also initiated a $101.4 million position during the quarter. The other funds with new positions in the stock are James Crichton’s Hitchwood Capital Management, Lei Zhang’s Hillhouse Capital Management, and Brad Farber’s Atika Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Zillow Group Inc (NASDAQ:Z) but similarly valued. We will take a look at Lloyds Banking Group PLC (NYSE:LYG), XP Inc. (NASDAQ:XP), Welltower Inc. (NYSE:WELL), Yandex NV (NASDAQ:YNDX), AMETEK, Inc. (NYSE:AME), Freeport-McMoRan Inc. (NYSE:FCX), and Phillips 66 (NYSE:PSX). This group of stocks’ market values resemble Z’s market value.
|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 29.1 hedge funds with bullish positions and the average amount invested in these stocks was $764 million. That figure was $3716 million in Z’s case. Freeport-McMoRan Inc. (NYSE:FCX) is the most popular stock in this table. On the other hand Lloyds Banking Group PLC (NYSE:LYG) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Zillow Group Inc (NASDAQ:Z) is more popular among hedge funds. Our overall hedge fund sentiment score for Z 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 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 November 27th and still beat the market by 16.1 percentage points. Unfortunately Z wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on Z were disappointed as the stock returned 6.4% since the end of the third quarter (through 11/27) 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 most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.