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Hedge Funds Are Dumping Bumble Inc. (BMBL)

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Last year we predicted the arrival of the first US recession since 2009 and we told in advance 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 Bumble Inc. (NASDAQ:BMBL).

Bumble Inc. (NASDAQ:BMBL) was in 23 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 29. BMBL has experienced a decrease in support from the world's most elite money managers of late. There were 29 hedge funds in our database with BMBL positions at the end of the first quarter. Our calculations also showed that BMBL isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Brad Gerstner Altimeter Capital
Brad Gerstner Altimeter Capital

Brad Gerstner of Altimeter Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let's take a gander at the recent hedge fund action regarding Bumble Inc. (NASDAQ:BMBL).

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

At second quarter's end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from the first quarter of 2020. By comparison, 0 hedge funds held shares or bullish call options in BMBL a year ago. With hedge funds' sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

More specifically, Altimeter Capital Management was the largest shareholder of Bumble Inc. (NASDAQ:BMBL), with a stake worth $60.5 million reported as of the end of June. Trailing Altimeter Capital Management was Tiger Global Management LLC, which amassed a stake valued at $57.6 million. Citadel Investment Group, Honeycomb Asset Management, and Rokos Capital Management 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 Kettle Hill Capital Management allocated the biggest weight to Bumble Inc. (NASDAQ:BMBL), around 2.2% of its 13F portfolio. Honeycomb Asset Management is also relatively very bullish on the stock, earmarking 1.92 percent of its 13F equity portfolio to BMBL.

Because Bumble Inc. (NASDAQ:BMBL) has experienced bearish sentiment from the smart money, logic holds that there were a few funds who were dropping their entire stakes heading into Q3. It's worth mentioning that Andreas Halvorsen's Viking Global sold off the biggest position of the "upper crust" of funds followed by Insider Monkey, worth close to $69.8 million in stock, and Daniel Sundheim's D1 Capital Partners was right behind this move, as the fund dumped about $43.7 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 6 funds heading into Q3.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Bumble Inc. (NASDAQ:BMBL) but similarly valued. We will take a look at Fastly, Inc. (NYSE:FSLY), Boyd Gaming Corporation (NYSE:BYD), Alcoa Corporation (NYSE:AA), Dada Nexus Limited (NASDAQ:DADA), Silicon Laboratories Inc. (NASDAQ:SLAB), Sotera Health Company (NASDAQ:SHC), and First American Financial Corp (NYSE:FAF). This group of stocks' market valuations are closest to BMBL's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FSLY,24,1140190,-2 BYD,36,534864,14 AA,44,1155642,6 DADA,18,160572,-3 SLAB,15,283453,-3 SHC,18,437692,-18 FAF,31,1224925,-1 Average,26.6,705334,-1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.6 hedge funds with bullish positions and the average amount invested in these stocks was $705 million. That figure was $299 million in BMBL's case. Alcoa Corporation (NYSE:AA) is the most popular stock in this table. On the other hand Silicon Laboratories Inc. (NASDAQ:SLAB) is the least popular one with only 15 bullish hedge fund positions. Bumble Inc. (NASDAQ:BMBL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BMBL is 36.6. 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 negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately BMBL wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BMBL investors were disappointed as the stock returned -3.7% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.