We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Match Group, Inc. (NASDAQ:MTCH).
Is Match Group, Inc. (NASDAQ:MTCH) a safe investment today? The best stock pickers were getting more optimistic. The number of bullish hedge fund bets rose by 1 lately. Match Group, Inc. (NASDAQ:MTCH) was in 39 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 44. Our calculations also showed that MTCH 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 to get excerpts of these letters in your inbox. Now we’re going to take a peek at the latest hedge fund action regarding Match Group, Inc. (NASDAQ:MTCH).
What have hedge funds been doing with Match Group, Inc. (NASDAQ:MTCH)?
At the end of the second quarter, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MTCH over the last 20 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Lone Pine Capital has the biggest position in Match Group, Inc. (NASDAQ:MTCH), worth close to $495 million, amounting to 2.5% of its total 13F portfolio. On Lone Pine Capital’s heels is Ursa Fund Management, managed by Andrew Hahn, which holds a $354.7 million call position; 21.5% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism encompass John Armitage’s Egerton Capital Limited, Eashwar Krishnan’s Tybourne Capital Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Portsea Asset Management allocated the biggest weight to Match Group, Inc. (NASDAQ:MTCH), around 33.17% of its 13F portfolio. Ursa Fund Management is also relatively very bullish on the stock, dishing out 21.45 percent of its 13F equity portfolio to MTCH.
As industrywide interest jumped, key money managers have been driving this bullishness. Tybourne Capital Management, managed by Eashwar Krishnan, assembled the most valuable position in Match Group, Inc. (NASDAQ:MTCH). Tybourne Capital Management had $273 million invested in the company at the end of the quarter. Scott Bessent’s Key Square Capital Management also initiated a $39 million position during the quarter. The following funds were also among the new MTCH investors: Leon Shaulov’s Maplelane Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Louis Bacon’s Moore Global Investments.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Match Group, Inc. (NASDAQ:MTCH) but similarly valued. These stocks are Ross Stores, Inc. (NASDAQ:ROST), Dow Inc. (NYSE:DOW), KLA Corporation (NASDAQ:KLAC), ICICI Bank Limited (NYSE:IBN), IHS Markit Ltd. (NYSE:INFO), Canadian Imperial Bank of Commerce (NYSE:CM), and EOG Resources Inc (NYSE:EOG). This group of stocks’ market valuations are similar to MTCH’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 33.9 hedge funds with bullish positions and the average amount invested in these stocks was $643 million. That figure was $1756 million in MTCH’s case. Ross Stores, Inc. (NASDAQ:ROST) is the most popular stock in this table. On the other hand Canadian Imperial Bank of Commerce (NYSE:CM) is the least popular one with only 6 bullish hedge fund positions. Match Group, Inc. (NASDAQ:MTCH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MTCH is 70.1. 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% in 2020 through October 30th and still beat the market by 20.1 percentage points. Hedge funds were also right about betting on MTCH as the stock returned 26.5% since the end of Q2 (through 10/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.