Were Hedge Funds Right About Crowding Into ANGI Homeservices Inc (ANGI)?

While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding ANGI Homeservices Inc (NASDAQ:ANGI).

Is ANGI Homeservices Inc (NASDAQ:ANGI) a buy right now? Prominent investors were getting more optimistic. The number of long hedge fund positions moved up by 21 in recent months. ANGI Homeservices Inc (NASDAQ:ANGI) was in 48 hedge funds’ portfolios at the end of June. The all time high for this statistics is 27. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ANGI 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 eyes of most market participants, hedge funds are viewed as unimportant, old investment vehicles of years past. While there are greater than 8000 funds with their doors open at present, We choose to focus on the bigwigs of this club, around 850 funds. These investment experts orchestrate bulk of the smart money’s total asset base, and by watching their finest stock picks, Insider Monkey has revealed several investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Christian Leone of Luxor Capital Group

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar 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 look at the key hedge fund action surrounding ANGI Homeservices Inc (NASDAQ:ANGI).

How are hedge funds trading ANGI Homeservices Inc (NASDAQ:ANGI)?

At Q2’s end, a total of 48 of the hedge funds tracked by Insider Monkey were long this stock, a change of 78% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ANGI over the last 20 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is ANGI A Good Stock To Buy?

The largest stake in ANGI Homeservices Inc (NASDAQ:ANGI) was held by Luxor Capital Group, which reported holding $84.1 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $66.3 million position. Other investors bullish on the company included Scopus Asset Management, ShawSpring Partners, and Ulysses Management. In terms of the portfolio weights assigned to each position ShawSpring Partners allocated the biggest weight to ANGI Homeservices Inc (NASDAQ:ANGI), around 8.34% of its 13F portfolio. Clearfield Capital is also relatively very bullish on the stock, earmarking 7.54 percent of its 13F equity portfolio to ANGI.

As industrywide interest jumped, key money managers have been driving this bullishness. Scopus Asset Management, managed by Alexander Mitchell, assembled the biggest position in ANGI Homeservices Inc (NASDAQ:ANGI). Scopus Asset Management had $44.7 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $29 million investment in the stock during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Clint Carlson’s Carlson Capital, and Dennis Puri and Oliver Keller’s Hunt Lane Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as ANGI Homeservices Inc (NASDAQ:ANGI) but similarly valued. These stocks are Manhattan Associates, Inc. (NASDAQ:MANH), Canopy Growth Corporation (NYSE:CGC), Post Holdings Inc (NYSE:POST), Five Below Inc (NASDAQ:FIVE), NovoCure Limited (NASDAQ:NVCR), Enphase Energy Inc (NASDAQ:ENPH), and Tandem Diabetes Care Inc (NASDAQ:TNDM). This group of stocks’ market values are closest to ANGI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MANH 15 287947 -5
CGC 11 10644 1
POST 34 1240001 3
FIVE 42 988706 11
NVCR 27 384434 0
ENPH 40 716678 5
TNDM 32 401577 4
Average 28.7 575712 2.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.7 hedge funds with bullish positions and the average amount invested in these stocks was $576 million. That figure was $668 million in ANGI’s case. Five Below Inc (NASDAQ:FIVE) is the most popular stock in this table. On the other hand Canopy Growth Corporation (NYSE:CGC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks ANGI Homeservices Inc (NASDAQ:ANGI) is more popular among hedge funds. Our overall hedge fund sentiment score for ANGI is 90. 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 30% in 2020 through October 23rd and still beat the market by 21 percentage points. Unfortunately ANGI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ANGI were disappointed as the stock returned -8.7% since the end of the second quarter (through 10/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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