Wix.Com Ltd (WIX): Hedge Funds Cashing Out

In this article you are going to find out whether hedge funds think Wix.Com Ltd (NASDAQ:WIX) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Wix.Com Ltd (NASDAQ:WIX) undervalued? Prominent investors are becoming less hopeful. The number of bullish hedge fund positions were cut by 5 recently. Our calculations also showed that WIX 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). WIX was in 29 hedge funds’ portfolios at the end of March. There were 34 hedge funds in our database with WIX positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Today there are a multitude of tools shareholders have at their disposal to appraise publicly traded companies. A duo of the most useful tools are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the elite money managers can trounce their index-focused peers by a superb amount (see the details here).

Kevin Oram Praesidium Investment Management

Kevin Oram of Praesidium Investment Management Company

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a gander at the fresh hedge fund action regarding Wix.Com Ltd (NASDAQ:WIX).

What have hedge funds been doing with Wix.Com Ltd (NASDAQ:WIX)?

At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from one quarter earlier. By comparison, 27 hedge funds held shares or bullish call options in WIX a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Steadfast Capital Management was the largest shareholder of Wix.Com Ltd (NASDAQ:WIX), with a stake worth $182.7 million reported as of the end of September. Trailing Steadfast Capital Management was Renaissance Technologies, which amassed a stake valued at $149.6 million. Isomer Partners, SQN Investors, and Praesidium Investment Management Company 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 Isomer Partners allocated the biggest weight to Wix.Com Ltd (NASDAQ:WIX), around 19.8% of its 13F portfolio. Blackcrane Capital is also relatively very bullish on the stock, setting aside 15.64 percent of its 13F equity portfolio to WIX.

Judging by the fact that Wix.Com Ltd (NASDAQ:WIX) has faced declining sentiment from the smart money, we can see that there is a sect of hedge funds that slashed their full holdings last quarter. Intriguingly, Daniel Patrick Gibson’s Sylebra Capital Management dropped the largest position of the “upper crust” of funds monitored by Insider Monkey, comprising close to $110.5 million in stock, and David Gallo’s Valinor Management LLC was right behind this move, as the fund dropped about $72.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 5 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Wix.Com Ltd (NASDAQ:WIX) but similarly valued. We will take a look at Lincoln National Corporation (NYSE:LNC), Lamar Advertising Company (REIT) (NASDAQ:LAMR), ON Semiconductor Corporation (NASDAQ:ON), and Aegon N.V. (NYSE:AEG). This group of stocks’ market values resemble WIX’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LNC 26 602265 -14
LAMR 34 217189 6
ON 29 153091 -3
AEG 4 16681 -2
Average 23.25 247307 -3.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $247 million. That figure was $597 million in WIX’s case. Lamar Advertising Company (REIT) (NASDAQ:LAMR) is the most popular stock in this table. On the other hand Aegon N.V. (NYSE:AEG) is the least popular one with only 4 bullish hedge fund positions. Wix.Com Ltd (NASDAQ:WIX) 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on WIX as the stock returned 120.5% in Q2 (through the end of May) 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.