"October lived up to its scary reputation—the S&P 500 falling in the month by the largest amount in the last 40 years, the only worse Octobers being '08 and the Crash of '87. For perspective, there have been only 5 occasions in those 40 years when the S&P 500 declined by greater than 20% from peak to trough. Other than the '87 Crash, all were during recessions. There were 17 other instances, over the same time frame, when the market fell by over 10% but less than 20%. Furthermore, this is the 18th correction of 5% or more since the current bull market started in March '09. Corrections are the norm. They can be healthy as they often undo market complacency—overbought levels—potentially allowing the market to base and move even higher." This is how Trapeze Asset Management summarized the recent market moves in its investor letter. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards one of the stocks hedge funds invest in.
Is Shutterfly, Inc. (NASDAQ:SFLY) a safe investment now? Money managers are selling. The number of bullish hedge fund bets decreased by 1 in recent months. Our calculations also showed that SFLY isn't among the 30 most popular stocks among hedge funds. SFLY was in 22 hedge funds' portfolios at the end of December. There were 23 hedge funds in our database with SFLY holdings at the end of the previous quarter.
In today’s marketplace there are a multitude of tools stock market investors can use to analyze their holdings. A duo of the most innovative tools are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top money managers can outperform the market by a superb amount (see the details here).
Let's take a peek at the latest hedge fund action encompassing Shutterfly, Inc. (NASDAQ:SFLY).
How have hedgies been trading Shutterfly, Inc. (NASDAQ:SFLY)?
At Q4's end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SFLY over the last 14 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Okumus Fund Management was the largest shareholder of Shutterfly, Inc. (NASDAQ:SFLY), with a stake worth $65.6 million reported as of the end of December. Trailing Okumus Fund Management was Freshford Capital Management, which amassed a stake valued at $55 million. EastBay Asset Management, Fine Capital Partners, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as Shutterfly, Inc. (NASDAQ:SFLY) has witnessed a decline in interest from the entirety of the hedge funds we track, we can see that there is a sect of hedgies who sold off their full holdings heading into Q3. Interestingly, Amish Mehta's SQN Investors sold off the biggest position of the 700 funds monitored by Insider Monkey, valued at about $104.2 million in call options, and Peter S. Park's Park West Asset Management was right behind this move, as the fund said goodbye to about $98.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q3.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Shutterfly, Inc. (NASDAQ:SFLY) but similarly valued. We will take a look at Universal Corp (NYSE:UVV), Orchard Therapeutics plc (NASDAQ:ORTX), Walker & Dunlop Inc. (NYSE:WD), and Arcosa, Inc. (NYSE:ACA). This group of stocks' market values match SFLY's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UVV,15,104264,-1 ORTX,12,272739,12 WD,11,54026,-7 ACA,19,324000,19 Average,14.25,188757,5.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $189 million. That figure was $368 million in SFLY's case. Arcosa, Inc. (NYSE:ACA) is the most popular stock in this table. On the other hand Walker & Dunlop Inc. (NYSE:WD) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Shutterfly, Inc. (NASDAQ:SFLY) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately SFLY wasn't nearly as popular as these 15 stock and hedge funds that were betting on SFLY were disappointed as the stock returned -4.9% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.