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 821 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 March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Fiverr International Ltd. (NYSE:FVRR) and determine whether the smart money was really smart about this stock.
Fiverr International Ltd. (NYSE:FVRR) investors should pay attention to an increase in enthusiasm from smart money of late. FVRR was in 13 hedge funds’ portfolios at the end of the first quarter of 2020. There were 11 hedge funds in our database with FVRR holdings at the end of the previous quarter. Our calculations also showed that FVRR isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the top 20 agriculture producing countries to identify emerging companies that are likely to deliver 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a glance at the new hedge fund action encompassing Fiverr International Ltd. (NYSE:FVRR).
What does smart money think about Fiverr International Ltd. (NYSE:FVRR)?
Heading into the second quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the fourth quarter of 2019. By comparison, 0 hedge funds held shares or bullish call options in FVRR a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Fiverr International Ltd. (NYSE:FVRR) was held by Brightlight Capital, which reported holding $10.8 million worth of stock at the end of September. It was followed by Sylebra Capital Management with a $10.6 million position. Other investors bullish on the company included Potrero Capital Research, Driehaus Capital, and G2 Investment Partners Management. In terms of the portfolio weights assigned to each position Brightlight Capital allocated the biggest weight to Fiverr International Ltd. (NYSE:FVRR), around 8.28% of its 13F portfolio. Nishkama Capital is also relatively very bullish on the stock, setting aside 5.94 percent of its 13F equity portfolio to FVRR.
As one would reasonably expect, key hedge funds have been driving this bullishness. Sylebra Capital Management, managed by Daniel Patrick Gibson, established the most valuable position in Fiverr International Ltd. (NYSE:FVRR). Sylebra Capital Management had $10.6 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also made a $5.8 million investment in the stock during the quarter. The other funds with brand new FVRR positions are Josh Goldberg’s G2 Investment Partners Management, D. E. Shaw’s D E Shaw, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Fiverr International Ltd. (NYSE:FVRR) but similarly valued. We will take a look at Compass Diversified Holdings (NYSE:CODI), Renewable Energy Group Inc (NASDAQ:REGI), HeadHunter Group PLC (NASDAQ:HHR), and Sprout Social, Inc. (NASDAQ:SPT). All of these stocks’ market caps resemble FVRR’s market cap.
|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 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $66 million. That figure was $55 million in FVRR’s case. Renewable Energy Group Inc (NASDAQ:REGI) is the most popular stock in this table. On the other hand Compass Diversified Holdings (NYSE:CODI) is the least popular one with only 4 bullish hedge fund positions. Fiverr International Ltd. (NYSE:FVRR) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.3% in 2020 through June 25th but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on FVRR as the stock returned 194% in Q2 (through June 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.