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At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Eventbrite, Inc. (NYSE:EB).
Is EB a good stock to buy now? Eventbrite, Inc. (NYSE:EB) was in 22 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 25. EB has experienced an increase in support from the world's most elite money managers lately. There were 20 hedge funds in our database with EB positions at the end of the second quarter. Our calculations also showed that EB isn't among the 30 most popular stocks among hedge funds (click for Q3 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 financial world there are tons of indicators market participants use to grade their holdings. A couple of the most innovative indicators are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the best hedge fund managers can outpace the market by a healthy margin (see the details here).
Brad Farber of Atika Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. With all of this in mind we're going to take a peek at the latest hedge fund action surrounding Eventbrite, Inc. (NYSE:EB).
Do Hedge Funds Think EB Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EB over the last 21 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Eventbrite, Inc. (NYSE:EB) was held by Cadian Capital, which reported holding $62.9 million worth of stock at the end of September. It was followed by Immersion Capital with a $42.9 million position. Other investors bullish on the company included Atalan Capital, Crescent Park Management, and Parian Global Management. In terms of the portfolio weights assigned to each position Immersion Capital allocated the biggest weight to Eventbrite, Inc. (NYSE:EB), around 4.31% of its 13F portfolio. Atalan Capital is also relatively very bullish on the stock, earmarking 2.25 percent of its 13F equity portfolio to EB.
Now, key money managers were leading the bulls' herd. Crescent Park Management, managed by Eli Cohen, assembled the most outsized position in Eventbrite, Inc. (NYSE:EB). Crescent Park Management had $9.3 million invested in the company at the end of the quarter. Joseph Samuels's Islet Management also initiated a $5.4 million position during the quarter. The other funds with brand new EB positions are Rob Citrone's Discovery Capital Management, George Baxter's Sabrepoint Capital, and Brad Farber's Atika Capital.
Let's also examine hedge fund activity in other stocks similar to Eventbrite, Inc. (NYSE:EB). These stocks are Nkarta, Inc. (NASDAQ:NKTX), KKR Real Estate Finance Trust Inc. (NYSE:KREF), Trinseo S.A. (NYSE:TSE), Sally Beauty Holdings, Inc. (NYSE:SBH), Signet Jewelers Limited (NYSE:SIG), Kite Realty Group Trust (NYSE:KRG), and Myriad Genetics, Inc. (NASDAQ:MYGN). This group of stocks' market values are closest to EB's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NKTX,8,412618,8 KREF,6,8662,-2 TSE,13,31760,-5 SBH,27,134912,1 SIG,22,379553,6 KRG,7,38413,-3 MYGN,19,190093,-2 Average,14.6,170859,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.6 hedge funds with bullish positions and the average amount invested in these stocks was $171 million. That figure was $193 million in EB's case. Sally Beauty Holdings, Inc. (NYSE:SBH) is the most popular stock in this table. On the other hand KKR Real Estate Finance Trust Inc. (NYSE:KREF) is the least popular one with only 6 bullish hedge fund positions. Eventbrite, Inc. (NYSE:EB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EB is 71.5. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on EB as the stock returned 67.2% since the end of Q3 (through 12/14) 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.