World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients' money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It's not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It's also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a gander at the key hedge fund action encompassing Eventbrite, Inc. (NYSE:EB).
How have hedgies been trading Eventbrite, Inc. (NYSE:EB)?
Heading into the second quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards EB over the last 15 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Eventbrite, Inc. (NYSE:EB) was held by Tiger Global Management, which reported holding $269.6 million worth of stock at the end of March. It was followed by Point72 Asset Management with a $19.5 million position. Other investors bullish on the company included ThornTree Capital Partners, Foxhaven Asset Management, and Park West Asset Management.
As industrywide interest jumped, key money managers were breaking ground themselves. ThornTree Capital Partners, managed by Mark Moore, created the biggest position in Eventbrite, Inc. (NYSE:EB). ThornTree Capital Partners had $14.2 million invested in the company at the end of the quarter. Peter S. Park's Park West Asset Management also initiated a $10.5 million position during the quarter. The other funds with brand new EB positions are Greg Poole's Echo Street Capital Management, Zachary Miller's Parian Global Management, and Joshua Nash's Ulysses Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Eventbrite, Inc. (NYSE:EB) but similarly valued. We will take a look at Wageworks Inc (NYSE:WAGE), Usa Compression Partners LP (NYSE:USAC), SecureWorks Corp. (NASDAQ:SCWX), and Cooper Tire & Rubber Company (NYSE:CTB). All of these stocks' market caps resemble EB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WAGE,21,160164,8 USAC,5,9108,0 SCWX,12,34560,3 CTB,17,145708,0 Average,13.75,87385,2.75 [/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 $87 million. That figure was $356 million in EB's case. Wageworks Inc (NYSE:WAGE) is the most popular stock in this table. On the other hand Usa Compression Partners LP (NYSE:USAC) is the least popular one with only 5 bullish hedge fund positions. Eventbrite, Inc. (NYSE:EB) 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately EB wasn't nearly as popular as these 20 stocks and hedge funds that were betting on EB were disappointed as the stock returned -11.8% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.