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Social Capital Hedosophia Holdings Corp. (IPOA): Are Hedge Funds Right About This Stock?

Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds and investors’ positions as of the end of the third quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Social Capital Hedosophia Holdings Corp. (NYSE:IPOA) based on that data.

Social Capital Hedosophia Holdings Corp. (NYSE:IPOA) was in 23 hedge funds’ portfolios at the end of the third quarter of 2018. IPOA shareholders have witnessed a decrease in enthusiasm from smart money in recent months. There were 25 hedge funds in our database with IPOA positions at the end of the previous quarter. Our calculations also showed that IPOA isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

HIGHBRIDGE CAPITAL MANAGEMENT

Glenn Russell Dubin of Highbridge Capital

We’re going to check out the new hedge fund action regarding Social Capital Hedosophia Holdings Corp. (NYSE:IPOA).

Hedge fund activity in Social Capital Hedosophia Holdings Corp. (NYSE:IPOA)

Heading into the fourth quarter of 2018, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in IPOA over the last 13 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

IPOA_dec2018

Of the funds tracked by Insider Monkey, Nick Niell’s Arrowgrass Capital Partners has the most valuable position in Social Capital Hedosophia Holdings Corp. (NYSE:IPOA), worth close to $44.6 million, corresponding to 1.4% of its total 13F portfolio. The second most bullish fund manager is Governors Lane, managed by Isaac Corre, which holds a $29.7 million position; 1.7% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism contain John M. Angelo and Michael L. Gordon’s Angelo Gordon & Co, Glenn Russell Dubin’s Highbridge Capital Management and John Thiessen’s Vertex One Asset Management.

Since Social Capital Hedosophia Holdings Corp. (NYSE:IPOA) has experienced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedge funds who sold off their positions entirely in the third quarter. Intriguingly, Doug Silverman and Alexander Klabin’s Senator Investment Group cut the largest position of the “upper crust” of funds tracked by Insider Monkey, valued at an estimated $33.5 million in stock. Jamie Mendola’s fund, Pacific Grove Capital, also dumped its stock, about $8.1 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds in the third quarter.

Let’s now review hedge fund activity in other stocks similar to Social Capital Hedosophia Holdings Corp. (NYSE:IPOA). We will take a look at Carolina Financial Corporation (NASDAQ:CARO), The Manitowoc Company, Inc. (NYSE:MTW), ORBCOMM Inc (NASDAQ:ORBC), and CBRE Clarion Global Real Estate Income Fund (NYSE:IGR). All of these stocks’ market caps resemble IPOA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CARO 6 46311 -1
MTW 21 204427 0
ORBC 15 129651 0
IGR 2 444 -1
Average 11 95208 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $95 million. That figure was $297 million in IPOA’s case. The Manitowoc Company, Inc. (NYSE:MTW) is the most popular stock in this table. On the other hand CBRE Clarion Global Real Estate Income Fund (NYSE:IGR) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Social Capital Hedosophia Holdings Corp. (NYSE:IPOA) 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.

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

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