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We at Insider Monkey have gone over 887 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of December 31st. In this article, we look at what those funds think of Godaddy Inc (NYSE:GDDY) based on that data.
Is GDDY stock a buy or sell? Godaddy Inc (NYSE:GDDY) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 44 hedge funds' portfolios at the end of the fourth quarter of 2020. Our calculations also showed that GDDY isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). At the end of this article we will also compare GDDY to other stocks including Imperial Oil Limited (NYSE:IMO), PTC Inc (NASDAQ:PTC), and Avalara, Inc. (NYSE:AVLR) to get a better sense of its popularity.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ricky Sandler of Eminence Capital
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Do Hedge Funds Think GDDY Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards GDDY over the last 22 quarters. With hedge funds' capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Select Equity Group, managed by Robert Joseph Caruso, holds the largest position in Godaddy Inc (NYSE:GDDY). Select Equity Group has a $878.7 million position in the stock, comprising 3.6% of its 13F portfolio. Coming in second is BlueSpruce Investments, managed by Tim Hurd and Ed Magnus, which holds a $540.8 million position; the fund has 10.7% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions encompass Mitch Kuflik and Rob Sobel's Brahman Capital, D. E. Shaw's D E Shaw and Alexis Fortune's Blacksheep Fund Management. In terms of the portfolio weights assigned to each position Blacksheep Fund Management allocated the biggest weight to Godaddy Inc (NYSE:GDDY), around 28.24% of its 13F portfolio. Brahman Capital is also relatively very bullish on the stock, earmarking 14.58 percent of its 13F equity portfolio to GDDY.
Judging by the fact that Godaddy Inc (NYSE:GDDY) has witnessed bearish sentiment from the aggregate hedge fund industry, it's easy to see that there was a specific group of hedge funds that elected to cut their full holdings heading into Q1. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital said goodbye to the largest position of all the hedgies tracked by Insider Monkey, comprising close to $26.3 million in stock, and Paul Marshall and Ian Wace's Marshall Wace LLP was right behind this move, as the fund said goodbye to about $23.5 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Godaddy Inc (NYSE:GDDY) but similarly valued. We will take a look at Imperial Oil Limited (NYSE:IMO), PTC Inc (NASDAQ:PTC), Avalara, Inc. (NYSE:AVLR), Westinghouse Air Brake Technologies Corporation (NYSE:WAB), Wix.Com Ltd (NASDAQ:WIX), Liberty Global plc (NASDAQ:LBTYA), and Black Knight, Inc. (NYSE:BKI). This group of stocks' market values are closest to GDDY's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IMO,8,20725,-3 PTC,38,1802897,-1 AVLR,56,1313766,10 WAB,45,2348711,7 WIX,37,999707,1 LBTYA,36,1123404,1 BKI,44,994940,3 Average,37.7,1229164,2.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.7 hedge funds with bullish positions and the average amount invested in these stocks was $1229 million. That figure was $2610 million in GDDY's case. Avalara, Inc. (NYSE:AVLR) is the most popular stock in this table. On the other hand Imperial Oil Limited (NYSE:IMO) is the least popular one with only 8 bullish hedge fund positions. Godaddy Inc (NYSE:GDDY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GDDY is 66.5. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 5.3% in 2021 through March 19th and beat the market again by 0.8 percentage points. Unfortunately GDDY wasn't nearly as popular as these 30 stocks and hedge funds that were betting on GDDY were disappointed as the stock returned -11.7% since the end of December (through 3/19) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.