The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don't follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That's why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Godaddy Inc (NYSE:GDDY) from the perspective of those elite funds.
Godaddy Inc (NYSE:GDDY) investors should be aware of an increase in support from the world's most elite money managers lately. GDDY was in 48 hedge funds' portfolios at the end of the third quarter of 2018. There were 42 hedge funds in our database with GDDY holdings at the end of the previous quarter. Our calculations also showed that GDDY isn't among the 30 most popular stocks among hedge funds.
In the eyes of most investors, hedge funds are perceived as unimportant, outdated investment tools of yesteryear. While there are more than 8000 funds with their doors open at present, We choose to focus on the bigwigs of this group, approximately 700 funds. These hedge fund managers handle most of the smart money's total capital, and by shadowing their first-class stock picks, Insider Monkey has deciphered many investment strategies that have historically outstripped Mr. Market. Insider Monkey's flagship hedge fund strategy beat the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
Let's check out the key hedge fund action regarding Godaddy Inc (NYSE:GDDY).
How have hedgies been trading Godaddy Inc (NYSE:GDDY)?
At Q3's end, a total of 48 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. On the other hand, there were a total of 34 hedge funds with a bullish position in GDDY at the beginning of this year. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
The largest stake in Godaddy Inc (NYSE:GDDY) was held by Silver Lake Partners, which reported holding $438.5 million worth of stock at the end of September. It was followed by Select Equity Group with a $317.7 million position. Other investors bullish on the company included Renaissance Technologies, D E Shaw, and Egerton Capital Limited.
As aggregate interest increased, some big names have been driving this bullishness. Blue Mountain Capital, managed by Andrew Feldstein and Stephen Siderow, established the biggest position in Godaddy Inc (NYSE:GDDY). Blue Mountain Capital had $12.2 million invested in the company at the end of the quarter. Sander Gerber's Hudson Bay Capital Management also made a $7.5 million investment in the stock during the quarter. The other funds with brand new GDDY positions are Richard Driehaus's Driehaus Capital, Jeffrey Talpins's Element Capital Management, and Bruce Kovner's Caxton Associates LP.
Let's also examine hedge fund activity in other stocks similar to Godaddy Inc (NYSE:GDDY). These stocks are The Liberty SiriusXM Group (NASDAQ:LSXMK), Xylem Inc (NYSE:XYL), TechnipFMC plc (NYSE:FTI), and Nasdaq, Inc. (NASDAQ:NDAQ). This group of stocks' market values are closest to GDDY's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LSXMK,48,3322137,4 XYL,20,616781,-1 FTI,23,526729,-3 NDAQ,20,309953,2 Average,27.75,1193900,0.5 [/table]
View table here if you experience formatting issues. As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $1194 million. That figure was $3169 million in GDDY's case. The Liberty SiriusXM Group (NASDAQ:LSXMK) is the most popular stock in this table. On the other hand Xylem Inc (NYSE:XYL) is the least popular one with only 20 bullish hedge fund positions. Godaddy Inc (NYSE:GDDY) 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. In this regard LSXMK might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.