In this article we will check out the progression of hedge fund sentiment towards eBay Inc (NASDAQ:EBAY) 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.
eBay Inc (NASDAQ:EBAY) was in 52 hedge funds' portfolios at the end of the first quarter of 2020. EBAY investors should be aware of an increase in hedge fund interest of late. There were 51 hedge funds in our database with EBAY positions at the end of the previous quarter. Our calculations also showed that EBAY 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 the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 72% since March 2017 and outperformed the S&P 500 ETFs by more than 44 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_26423" align="aligncenter" width="400"] Seth Klarman of Baupost Group[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We interview hedge fund managers and ask them about best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to take a look at the latest hedge fund action surrounding eBay Inc (NASDAQ:EBAY).
Hedge fund activity in eBay Inc (NASDAQ:EBAY)
At Q1's end, a total of 52 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 2% from one quarter earlier. On the other hand, there were a total of 48 hedge funds with a bullish position in EBAY a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in eBay Inc (NASDAQ:EBAY) was held by Baupost Group, which reported holding $964.5 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $375.4 million position. Other investors bullish on the company included Elliott Management, Citadel Investment Group, and Starboard Value LP. In terms of the portfolio weights assigned to each position Baupost Group allocated the biggest weight to eBay Inc (NASDAQ:EBAY), around 14.24% of its 13F portfolio. Starboard Value LP is also relatively very bullish on the stock, designating 9.65 percent of its 13F equity portfolio to EBAY.
As industrywide interest jumped, some big names have jumped into eBay Inc (NASDAQ:EBAY) headfirst. Ako Capital, managed by Nicolai Tangen, assembled the largest position in eBay Inc (NASDAQ:EBAY). Ako Capital had $169.8 million invested in the company at the end of the quarter. Brandon Haley's Holocene Advisors also initiated a $53.8 million position during the quarter. The other funds with new positions in the stock are Josh Resnick's Jericho Capital Asset Management, Benjamin Pass's TOMS Capital, and Richard Mashaal's Rima Senvest Management.
Let's now review hedge fund activity in other stocks similar to eBay Inc (NASDAQ:EBAY). We will take a look at Telefonica S.A. (NYSE:TEF), The Kroger Co. (NYSE:KR), Phillips 66 (NYSE:PSX), and NXP Semiconductors NV (NASDAQ:NXPI). This group of stocks' market values are closest to EBAY's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TEF,7,16531,-2 KR,43,1581591,12 PSX,43,420207,-3 NXPI,52,1234255,-28 Average,36.25,813146,-5.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.25 hedge funds with bullish positions and the average amount invested in these stocks was $813 million. That figure was $3096 million in EBAY's case. NXP Semiconductors NV (NASDAQ:NXPI) is the most popular stock in this table. On the other hand Telefonica S.A. (NYSE:TEF) is the least popular one with only 7 bullish hedge fund positions. eBay Inc (NASDAQ:EBAY) 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 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on EBAY as the stock returned 44.5% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.