In this article we will check out the progression of hedge fund sentiment towards The Meet Group, Inc. (NASDAQ:MEET) 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.
The Meet Group, Inc. (NASDAQ:MEET) investors should be aware of an increase in hedge fund sentiment recently. Our calculations also showed that MEET isn't among the 30 most popular stocks among hedge funds (click for Q1 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.
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 58 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_750227" align="aligncenter" width="395"] Alex Litowitz of Magnetar Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's take a peek at the fresh hedge fund action surrounding The Meet Group, Inc. (NASDAQ:MEET).
How are hedge funds trading The Meet Group, Inc. (NASDAQ:MEET)?
At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 40% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards MEET over the last 18 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Magnetar Capital, managed by Alec Litowitz and Ross Laser, holds the number one position in The Meet Group, Inc. (NASDAQ:MEET). Magnetar Capital has a $30.1 million position in the stock, comprising 0.7% of its 13F portfolio. The second largest stake is held by Christian Leone of Luxor Capital Group, with a $25.9 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions include John Orrico's Water Island Capital, Matthew Mark's Jet Capital Investors and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital. In terms of the portfolio weights assigned to each position Jet Capital Investors allocated the biggest weight to The Meet Group, Inc. (NASDAQ:MEET), around 5.28% of its 13F portfolio. Water Island Capital is also relatively very bullish on the stock, setting aside 1.08 percent of its 13F equity portfolio to MEET.
As one would reasonably expect, key money managers have been driving this bullishness. Magnetar Capital, managed by Alec Litowitz and Ross Laser, assembled the most valuable position in The Meet Group, Inc. (NASDAQ:MEET). Magnetar Capital had $30.1 million invested in the company at the end of the quarter. John Orrico's Water Island Capital also made a $14.9 million investment in the stock during the quarter. The following funds were also among the new MEET investors: Matthew Mark's Jet Capital Investors, Noam Gottesman's GLG Partners, and Carl Tiedemann and Michael Tiedemann's TIG Advisors.
Let's now review hedge fund activity in other stocks similar to The Meet Group, Inc. (NASDAQ:MEET). These stocks are QuinStreet Inc (NASDAQ:QNST), G1 Therapeutics, Inc. (NASDAQ:GTHX), Energy Recovery, Inc. (NASDAQ:ERII), and BioSpecifics Technologies Corp. (NASDAQ:BSTC). This group of stocks' market values are closest to MEET's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QNST,22,93394,4 GTHX,13,25511,2 ERII,11,45757,4 BSTC,9,52752,-2 Average,13.75,54354,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $97 million in MEET's case. QuinStreet Inc (NASDAQ:QNST) is the most popular stock in this table. On the other hand BioSpecifics Technologies Corp. (NASDAQ:BSTC) is the least popular one with only 9 bullish hedge fund positions. The Meet Group, Inc. (NASDAQ:MEET) is not the most popular stock in this group but hedge fund interest is still above average. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but beat the market by 14.8 percentage points. Unfortunately MEET wasn't nearly as popular as these 10 stocks and hedge funds that were betting on MEET were disappointed as the stock returned 6.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.