Were Hedge Funds Right About Bumble Inc. (BMBL)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Bumble Inc. (NASDAQ:BMBL) in this article.

Is Bumble Inc. (NASDAQ:BMBL) worth your attention right now? The smart money was getting less optimistic. The number of bullish hedge fund bets were trimmed by 6 in recent months. Bumble Inc. (NASDAQ:BMBL) was in 23 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 29. Our calculations also showed that BMBL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

If you’d ask most market participants, hedge funds are perceived as worthless, old investment vehicles of yesteryear. While there are over 8000 funds with their doors open today, We look at the bigwigs of this club, about 850 funds. It is estimated that this group of investors have their hands on the lion’s share of the hedge fund industry’s total capital, and by keeping an eye on their highest performing stock picks, Insider Monkey has formulated a number of investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to check out the latest hedge fund action regarding Bumble Inc. (NASDAQ:BMBL).

Do Hedge Funds Think BMBL Is A Good Stock To Buy Now?

At Q2’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from the previous quarter. The graph below displays the number of hedge funds with bullish position in BMBL over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Altimeter Capital Management held the most valuable stake in Bumble Inc. (NASDAQ:BMBL), which was worth $60.5 million at the end of the second quarter. On the second spot was Tiger Global Management LLC which amassed $57.6 million worth of shares. Citadel Investment Group, Honeycomb Asset Management, and Rokos Capital Management 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 Kettle Hill Capital Management allocated the biggest weight to Bumble Inc. (NASDAQ:BMBL), around 2.2% of its 13F portfolio. Honeycomb Asset Management is also relatively very bullish on the stock, dishing out 1.92 percent of its 13F equity portfolio to BMBL.

Due to the fact that Bumble Inc. (NASDAQ:BMBL) has experienced declining sentiment from the smart money, logic holds that there was a specific group of fund managers who sold off their full holdings heading into Q3. At the top of the heap, Andreas Halvorsen’s Viking Global said goodbye to the biggest investment of the 750 funds followed by Insider Monkey, comprising about $69.8 million in stock. Daniel Sundheim’s fund, D1 Capital Partners, also cut its stock, about $43.7 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 6 funds heading into Q3.

Let’s also examine hedge fund activity in other stocks similar to Bumble Inc. (NASDAQ:BMBL). These stocks are Fastly, Inc. (NYSE:FSLY), Boyd Gaming Corporation (NYSE:BYD), Alcoa Corporation (NYSE:AA), Dada Nexus Limited (NASDAQ:DADA), Silicon Laboratories (NASDAQ:SLAB), Sotera Health Company (NASDAQ:SHC), and First American Financial Corp (NYSE:FAF). This group of stocks’ market valuations resemble BMBL’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.6 hedge funds with bullish positions and the average amount invested in these stocks was $705 million. That figure was $299 million in BMBL’s case. Alcoa Corporation (NYSE:AA) is the most popular stock in this table. On the other hand Silicon Laboratories (NASDAQ:SLAB) is the least popular one with only 15 bullish hedge fund positions. Bumble Inc. (NASDAQ:BMBL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BMBL is 36.6. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 through November 5th and surpassed the market again by 3.1 percentage points. Unfortunately BMBL wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BMBL investors were disappointed as the stock returned -9.7% since the end of June (through 11/5) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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

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