We at Insider Monkey have gone over 821 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 March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Cardlytics, Inc. (NASDAQ:CDLX) based on that data.
Hedge fund interest in Cardlytics, Inc. (NASDAQ:CDLX) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Standard Motor Products, Inc. (NYSE:SMP), First Busey Corporation (NASDAQ:BUSE), and Sonos, Inc. (NASDAQ:SONO) to gather more data points. Our calculations also showed that CDLX 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.
In today’s marketplace there are tons of gauges investors use to grade their stock investments. A duo of the most useful gauges are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can trounce the market by a significant amount (see the details here).
[caption id="attachment_224708" align="aligncenter" width="399"] New York Stock Exchange[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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. With all of this in mind let's analyze the new hedge fund action surrounding Cardlytics, Inc. (NASDAQ:CDLX).
What does smart money think about Cardlytics, Inc. (NASDAQ:CDLX)?
Heading into the second quarter of 2020, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2019. By comparison, 9 hedge funds held shares or bullish call options in CDLX a year ago. With hedgies' capital changing hands, there exists a few key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, CAS Investment Partners was the largest shareholder of Cardlytics, Inc. (NASDAQ:CDLX), with a stake worth $138.1 million reported as of the end of September. Trailing CAS Investment Partners was 683 Capital Partners, which amassed a stake valued at $30.3 million. Antipodean Advisors, JS Capital, and Brightlight Capital 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 CAS Investment Partners allocated the biggest weight to Cardlytics, Inc. (NASDAQ:CDLX), around 30.38% of its 13F portfolio. Antipodean Advisors is also relatively very bullish on the stock, designating 21.17 percent of its 13F equity portfolio to CDLX.
Judging by the fact that Cardlytics, Inc. (NASDAQ:CDLX) has faced a decline in interest from hedge fund managers, it's safe to say that there exists a select few hedge funds that elected to cut their full holdings last quarter. Interestingly, Dipak Patel's Alight Capital dumped the biggest stake of all the hedgies watched by Insider Monkey, totaling about $2 million in stock. Principal Global Investors's fund, Columbus Circle Investors, also cut its stock, about $1.8 million worth. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks similar to Cardlytics, Inc. (NASDAQ:CDLX). We will take a look at Standard Motor Products, Inc. (NYSE:SMP), First Busey Corporation (NASDAQ:BUSE), Sonos, Inc. (NASDAQ:SONO), and Carpenter Technology Corporation (NYSE:CRS). All of these stocks' market caps resemble CDLX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SMP,9,68050,-1 BUSE,11,27678,-1 SONO,33,139823,7 CRS,16,47508,0 Average,17.25,70765,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $292 million in CDLX's case. Sonos, Inc. (NASDAQ:SONO) is the most popular stock in this table. On the other hand Standard Motor Products, Inc. (NYSE:SMP) is the least popular one with only 9 bullish hedge fund positions. Cardlytics, Inc. (NASDAQ:CDLX) is not the most popular stock in this group but hedge fund interest is still above average. 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on CDLX as the stock returned 94.8% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.