Is Shutterstock Inc (NYSE:SSTK) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing 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 have 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.
Shutterstock Inc (NYSE:SSTK) was in 17 hedge funds' portfolios at the end of the first quarter of 2019. SSTK shareholders have witnessed an increase in hedge fund interest recently. There were 16 hedge funds in our database with SSTK positions at the end of the previous quarter. Our calculations also showed that sstk isn't among the 30 most popular stocks among hedge funds.
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.
Let's take a look at the key hedge fund action encompassing Shutterstock Inc (NYSE:SSTK).
How have hedgies been trading Shutterstock Inc (NYSE:SSTK)?
Heading into the second quarter of 2019, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the fourth quarter of 2018. On the other hand, there were a total of 19 hedge funds with a bullish position in SSTK a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Renaissance Technologies, managed by Jim Simons, holds the biggest position in Shutterstock Inc (NYSE:SSTK). Renaissance Technologies has a $39.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by D E Shaw, managed by D. E. Shaw, which holds a $27.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers with similar optimism consist of Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Israel Englander's Millennium Management and John Overdeck and David Siegel's Two Sigma Advisors.
With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the largest position in Shutterstock Inc (NYSE:SSTK). Arrowstreet Capital had $11.7 million invested in the company at the end of the quarter. Jeffrey Talpins's Element Capital Management also made a $0.4 million investment in the stock during the quarter. The only other fund with a new position in the stock is Brandon Haley's Holocene Advisors.
Let's now review hedge fund activity in other stocks similar to Shutterstock Inc (NYSE:SSTK). These stocks are Ameris Bancorp (NASDAQ:ABCB), Allscripts Healthcare Solutions Inc (NASDAQ:MDRX), Hostess Brands, Inc. (NASDAQ:TWNK), and MSG Networks Inc (NYSE:MSGN). This group of stocks' market valuations are similar to SSTK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ABCB,17,126038,-1 MDRX,21,200430,3 TWNK,24,132667,4 MSGN,21,261088,1 Average,20.75,180056,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $180 million. That figure was $111 million in SSTK's case. Hostess Brands, Inc. (NASDAQ:TWNK) is the most popular stock in this table. On the other hand Ameris Bancorp (NASDAQ:ABCB) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Shutterstock Inc (NYSE:SSTK) is even less popular than ABCB. Hedge funds dodged a bullet by taking a bearish stance towards SSTK. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately SSTK wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); SSTK investors were disappointed as the stock returned -14.7% during the same time frame 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 the second quarter.
Disclosure: None. This article was originally published at Insider Monkey.
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