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Is FVRR A Good Stock To Buy According To Hedge Funds?

Asma UL Husna
·5 min read

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Fiverr International Ltd. (NYSE:FVRR).

Is FVRR a good stock to buy? Hedge funds were in an optimistic mood. The number of bullish hedge fund positions rose by 9 recently. Fiverr International Ltd. (NYSE:FVRR) was in 30 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 21. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FVRR 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.

To the average investor there are dozens of signals stock traders put to use to assess stocks. A couple of the less utilized signals are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the top hedge fund managers can outclass the broader indices by a solid margin (see the details here).

Peter Rathjens Arrowstreet Capital 394
Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. Now we're going to check out the fresh hedge fund action surrounding Fiverr International Ltd. (NYSE:FVRR).

Do Hedge Funds Think FVRR Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 43% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FVRR over the last 21 quarters. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Karthik Sarma's SRS Investment Management has the most valuable position in Fiverr International Ltd. (NYSE:FVRR), worth close to $137.2 million, comprising 2.5% of its total 13F portfolio. The second most bullish fund manager is Composite Capital, led by David Ma, holding a $107.5 million position; the fund has 24.8% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions encompass Renaissance Technologies, D. E. Shaw's D E Shaw and Vadim Rubinchik's Brightlight Capital. In terms of the portfolio weights assigned to each position Composite Capital allocated the biggest weight to Fiverr International Ltd. (NYSE:FVRR), around 24.75% of its 13F portfolio. Brightlight Capital is also relatively very bullish on the stock, earmarking 17.16 percent of its 13F equity portfolio to FVRR.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. SRS Investment Management, managed by Karthik Sarma, assembled the biggest position in Fiverr International Ltd. (NYSE:FVRR). SRS Investment Management had $137.2 million invested in the company at the end of the quarter. David Ma's Composite Capital also made a $107.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Jack Woodruff's Candlestick Capital Management, James Crichton's Hitchwood Capital Management, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.

Let's go over 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 Kimco Realty Corp (NYSE:KIM), Berkeley Lights, Inc. (NASDAQ:BLI), AppFolio Inc (NASDAQ:APPF), Globus Medical Inc (NYSE:GMED), Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), Landstar System, Inc. (NASDAQ:LSTR), and The Descartes Systems Group Inc (NASDAQ:DSGX). This group of stocks' market valuations match FVRR's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KIM,22,183861,-6 BLI,10,53013,10 APPF,26,336756,5 GMED,33,100676,1 IOVA,40,1475319,-3 LSTR,23,210116,0 DSGX,12,212088,2 Average,23.7,367404,1.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.7 hedge funds with bullish positions and the average amount invested in these stocks was $367 million. That figure was $564 million in FVRR's case. Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is the most popular stock in this table. On the other hand Berkeley Lights, Inc. (NASDAQ:BLI) is the least popular one with only 10 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 overall hedge fund sentiment score for FVRR is 73.3. 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 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on FVRR as the stock returned 50.6% since the end of Q3 (through 12/18) 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.

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