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In this article we will check out the progression of hedge fund sentiment towards fuboTV Inc. (NYSE:FUBO) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is FUBO stock a buy? Prominent investors were taking an optimistic view. The stock went public during the fourth quarter and fuboTV Inc. (NYSE:FUBO) was in 31 hedge funds' portfolios at the end of the fourth quarter of 2020. This is a respectable number for a newly public company. Our calculations also showed that FUBO isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 124 percentage points since March 2017 (see the details here).
David E. Shaw of D.E. Shaw
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 let's take a look at the latest hedge fund action encompassing fuboTV Inc. (NYSE:FUBO).
Do Hedge Funds Think FUBO Is A Good Stock To Buy Now?
At the end of December, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 31 from the third quarter of 2020. On the other hand, there were a total of 0 hedge funds with a bullish position in FUBO a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Joseph Samuels's Islet Management has the biggest position in fuboTV Inc. (NYSE:FUBO), worth close to $76.9 million, corresponding to 3.5% of its total 13F portfolio. The second largest stake is held by CaaS Capital, managed by Frank Fu, which holds a $69.1 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions contain Jacob Doft's Highline Capital Management, D. E. Shaw's D E Shaw and Leon Shaulov's Maplelane Capital. In terms of the portfolio weights assigned to each position Highline Capital Management allocated the biggest weight to fuboTV Inc. (NYSE:FUBO), around 31.56% of its 13F portfolio. Islet Management is also relatively very bullish on the stock, dishing out 3.51 percent of its 13F equity portfolio to FUBO.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Islet Management, managed by Joseph Samuels, established the most valuable position in fuboTV Inc. (NYSE:FUBO). Islet Management had $76.9 million invested in the company at the end of the quarter. Frank Fu's CaaS Capital also made a $69.1 million investment in the stock during the quarter. The following funds were also among the new FUBO investors: Jacob Doft's Highline Capital Management, D. E. Shaw's D E Shaw, and Leon Shaulov's Maplelane Capital.
Let's check out hedge fund activity in other stocks similar to fuboTV Inc. (NYSE:FUBO). These stocks are Chesapeake Utilities Corporation (NYSE:CPK), TPI Composites, Inc. (NASDAQ:TPIC), Revance Therapeutics Inc (NASDAQ:RVNC), Edgewell Personal Care Company (NYSE:EPC), Amarin Corporation plc (NASDAQ:AMRN), Boise Cascade Co (NYSE:BCC), and O-I Glass, Inc. (NYSE:OI). This group of stocks' market values resemble FUBO's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CPK,4,3595,-3 TPIC,27,213945,7 RVNC,12,133296,-1 EPC,20,232958,-1 AMRN,24,400358,-6 BCC,21,79789,-4 OI,25,266604,-2 Average,19,190078,-1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $190 million. That figure was $494 million in FUBO's case. TPI Composites, Inc. (NASDAQ:TPIC) is the most popular stock in this table. On the other hand Chesapeake Utilities Corporation (NYSE:CPK) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks fuboTV Inc. (NYSE:FUBO) is more popular among hedge funds. Our overall hedge fund sentiment score for FUBO 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Unfortunately FUBO wasn't nearly as popular as these 30 stocks and hedge funds that were betting on FUBO were disappointed as the stock returned -23.8% since the end of the fourth quarter (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.