The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Roku, Inc. (NASDAQ:ROKU).
Roku, Inc. (NASDAQ:ROKU) investors should be aware of an increase in enthusiasm from smart money recently. Roku, Inc. (NASDAQ:ROKU) was in 63 hedge funds' portfolios at the end of March. The all time high for this statistic was previously 60. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 60 hedge funds in our database with ROKU holdings at the end of December. Our calculations also showed that ROKU isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Phillip Gross of Adage Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, advertising technology one of the fastest growing industries right now, so we are checking out stock pitches like this under-the-radar adtech stock that can deliver 10x gains. We go through lists like the 10 best hydrogen fuel cell 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 we're going to take a look at the key hedge fund action regarding Roku, Inc. (NASDAQ:ROKU).
Do Hedge Funds Think ROKU Is A Good Stock To Buy Now?
At the end of March, a total of 63 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ROKU over the last 23 quarters. So, let's see 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, ARK Investment Management, managed by Catherine D. Wood, holds the biggest position in Roku, Inc. (NASDAQ:ROKU). ARK Investment Management has a $1.6281 billion position in the stock, comprising 3.2% of its 13F portfolio. The second most bullish fund manager is Citadel Investment Group, managed by Ken Griffin, which holds a $640 million call position; 0.2% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism include Renaissance Technologies, D. E. Shaw's D E Shaw and John Overdeck and David Siegel's Two Sigma Advisors. In terms of the portfolio weights assigned to each position Ogborne Capital allocated the biggest weight to Roku, Inc. (NASDAQ:ROKU), around 22.72% of its 13F portfolio. Kuvari Partners is also relatively very bullish on the stock, earmarking 16.78 percent of its 13F equity portfolio to ROKU.
Now, specific money managers have been driving this bullishness. Two Sigma Advisors, managed by John Overdeck and David Siegel, assembled the largest position in Roku, Inc. (NASDAQ:ROKU). Two Sigma Advisors had $259.2 million invested in the company at the end of the quarter. Vikram Kumar's Kuvari Partners also made a $17.5 million investment in the stock during the quarter. The following funds were also among the new ROKU investors: Benjamin A. Smith's Laurion Capital Management, Suraj Parkash Chopra's Force Hill Capital Management, and Phill Gross and Robert Atchinson's Adage Capital Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Roku, Inc. (NASDAQ:ROKU) but similarly valued. We will take a look at IDEXX Laboratories, Inc. (NASDAQ:IDXX), Microchip Technology Incorporated (NASDAQ:MCHP), Manulife Financial Corporation (NYSE:MFC), eBay Inc (NASDAQ:EBAY), L3Harris Technologies, Inc. (NYSE:LHX), The Bank of New York Mellon Corporation (NYSE:BK), and Cognizant Technology Solutions Corp (NASDAQ:CTSH). This group of stocks' market caps match ROKU's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IDXX,49,2851712,3 MCHP,42,962773,-3 MFC,17,190066,-3 EBAY,51,3762465,-2 LHX,41,1398723,4 BK,49,4769692,2 CTSH,33,3339212,-13 Average,40.3,2467806,-1.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.3 hedge funds with bullish positions and the average amount invested in these stocks was $2468 million. That figure was $3781 million in ROKU's case. eBay Inc (NASDAQ:EBAY) is the most popular stock in this table. On the other hand Manulife Financial Corporation (NYSE:MFC) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Roku, Inc. (NASDAQ:ROKU) is more popular among hedge funds. Our overall hedge fund sentiment score for ROKU is 88. 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 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Unfortunately ROKU wasn't nearly as popular as these 5 stocks and hedge funds that were betting on ROKU were disappointed as the stock returned 6.5% since the end of the first quarter (through 6/11) 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 since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.