The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Zynga Inc (NASDAQ:ZNGA).
Zynga Inc (NASDAQ:ZNGA) investors should be aware of a decrease in support from the world’s most elite money managers lately. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Hancock Holding Company (NASDAQ:HBHC), B&G Foods, Inc. (NYSE:BGS), and Time Inc (NYSE:TIME) to gather more data points.
In the eyes of most shareholders, hedge funds are seen as slow, old financial vehicles of the past. While there are greater than 8000 funds trading at present, Our experts choose to focus on the crème de la crème of this group, around 700 funds. These hedge fund managers manage bulk of the smart money’s total asset base, and by monitoring their first-class investments, Insider Monkey has unearthed a number of investment strategies that have historically outperformed Mr. Market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.
Now, we’re going to take a glance at the new action encompassing Zynga Inc (NASDAQ:ZNGA).
Hedge fund activity in Zynga Inc (NASDAQ:ZNGA)
At the end of the third quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the second quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ricky Sandler’s Eminence Capital has the biggest position in Zynga Inc (NASDAQ:ZNGA), worth close to $166.8 million, amounting to 2.6% of its total 13F portfolio. Sitting at the No. 2 spot is Luxor Capital Group, led by Christian Leone, holding a $97.7 million position; 2.2% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions encompass Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and Marc Majzner’s Clearline Capital.
Seeing as Zynga Inc (NASDAQ:ZNGA) has witnessed bearish sentiment from the smart money, it’s easy to see that there was a specific group of hedge funds who were dropping their entire stakes in the third quarter. Interestingly, Karthik Sarma’s SRS Investment Management sold off the biggest investment of all the hedgies tracked by Insider Monkey, comprising about $50.6 million in stock, and Millennium Management Subsidiary’s Blue Arrow Capital Management was right behind this move, as the fund said goodbye to about $14.6 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 3 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Zynga Inc (NASDAQ:ZNGA). These stocks are Hancock Holding Company (NASDAQ:HBHC), B&G Foods, Inc. (NYSE:BGS), Time Inc (NYSE:TIME), and Generac Holdings Inc. (NYSE:GNRC). All of these stocks’ market caps are similar to ZNGA’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $135 million. That figure was $495 million in ZNGA’s case. Time Inc (NYSE:TIME) is the most popular stock in this table. On the other hand Generac Holdings Inc. (NYSE:GNRC) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Zynga Inc (NASDAQ:ZNGA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.