The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Stamps.com Inc. (NASDAQ:STMP) and determine whether the smart money was really smart about this stock.
Is Stamps.com Inc. (NASDAQ:STMP) ready to rally soon? The best stock pickers were in an optimistic mood. The number of bullish hedge fund bets advanced by 1 recently. Stamps.com Inc. (NASDAQ:STMP) was in 30 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 38. Our calculations also showed that STMP isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a 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, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world 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. Now we’re going to take a look at the new hedge fund action encompassing Stamps.com Inc. (NASDAQ:STMP).
How have hedgies been trading Stamps.com Inc. (NASDAQ:STMP)?
At the end of the second quarter, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in STMP a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
More specifically, D E Shaw was the largest shareholder of Stamps.com Inc. (NASDAQ:STMP), with a stake worth $180.5 million reported as of the end of September. Trailing D E Shaw was Fisher Asset Management, which amassed a stake valued at $125.9 million. Arrowstreet Capital, Two Sigma Advisors, 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 Lyon Street Capital allocated the biggest weight to Stamps.com Inc. (NASDAQ:STMP), around 5.75% of its 13F portfolio. G2 Investment Partners Management is also relatively very bullish on the stock, setting aside 4.15 percent of its 13F equity portfolio to STMP.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Shannon River Fund Management, managed by Spencer M. Waxman, initiated the biggest position in Stamps.com Inc. (NASDAQ:STMP). Shannon River Fund Management had $28.4 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $11.6 million position during the quarter. The other funds with brand new STMP positions are Noam Gottesman’s GLG Partners, Mark Coe’s Intrinsic Edge Capital, and Harry Gail’s Harspring Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Stamps.com Inc. (NASDAQ:STMP) but similarly valued. These stocks are iRhythm Technologies, Inc. (NASDAQ:IRTC), ACI Worldwide Inc (NASDAQ:ACIW), New Jersey Resources Corp (NYSE:NJR), Popular Inc (NASDAQ:BPOP), Penske Automotive Group, Inc. (NYSE:PAG), Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), and First Horizon National Corporation (NYSE:FHN). This group of stocks’ market valuations are similar to STMP’s market valuation.
|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 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $270 million. That figure was $566 million in STMP’s case. First Horizon National Corporation (NYSE:FHN) is the most popular stock in this table. On the other hand New Jersey Resources Corp (NYSE:NJR) is the least popular one with only 14 bullish hedge fund positions. Stamps.com Inc. (NASDAQ:STMP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for STMP is 67.8. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23.8% in 2020 through September 14th and still beat the market by 17.6 percentage points. Hedge funds were also right about betting on STMP as the stock returned 18.1% during Q3 (through September 14th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.