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Why Match Group (MTCH) Stock is a Compelling Investment Case

Alex Smith
·4 min read

Blue Hawk Investment Group recently released its Q2 2020 Investor Letter, a copy of which you can download here. The fund posted a return of 14.06% for the quarter (net), underperforming its benchmark, the S&P 500 Index which returned 19.95% in the same quarter. You should check out Blue Hawk Investment Group’s top 5 stock picks for investors to buy right now, which could be the biggest winners of the stock market crash.

In the said letter, Blue Hawk highlighted a few stocks and Match Group Inc. (NASDAQ:MTCH) is one of them. Match Group Inc. (NASDAQ:MTCH) provides dating products worldwide. Match Group Inc. (NASDAQ:MTCH) stock gained 3.7% in the trailing-five days and on August 7th it had a closing price of $115.88. Here is what Blue Hawk said:

"Match Group (MTCH) – As we mentioned last quarter, we felt that restrictions on large social gatherings would be a tailwind for online dating and MTCH, as singles’ demand to date would not be diminished in a socially distant world. The company reported a strong Q1’20, with revenue growing 19% y/y ex FX, driven by Tinder Direct’s 31% y/y revenue growth with average subscribers growing 28%. In addition to the strong quarterly growth numbers, the company also noted accelerating engagement levels on the platform and record numbers of messaging and video dates, a positive sign for overall ecosystem health.

In addition, the company completed the spin-off from its parent company IAC on the last day of the quarter, becoming a fully independent company and greatly increasing the liquidity of its equity. As we saw from our days following and owning Blue Buffalo, these events can be counterintuitive for premier, durable growth stories. One would expect the increase in liquidity (supply) to put pressure on the share price, however, the opposite can occur in these unique situations – due to the over-concentration of assets in the growth fund space. The increased liquidity from the spin in this particular example allows the big funds to build a position, which was not previously possible, so supply of available stocks increases but demand increases to a larger extent and drives up the price, a nice nearterm tailwind for the newly-independent company."

Best US Cities for One Night Stands
Best US Cities for One Night Stands

Nejron Photo/Shutterstock.com

In Q1 2020, the number of bullish hedge fund positions on Match Group Inc. (NASDAQ:MTCH) stock increased by about 19% from the previous quarter (see the chart here), so a number of other hedge fund managers seem to agree with Match Group's growth potential. Our calculations showed that Match Group Inc. (NASDAQ:MTCH) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. With Federal Reserve creating trillions of dollars out of thin air, we believe gold prices will keep increasing. So, we are checking out gold stocks like this small gold mining company. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. You can subscribe to our free enewsletter below to receive our stories in your inbox:

Disclosure: None. This article is originally published at Insider Monkey.