A market surge in the first quarter, spurred by easing global macroeconomic concerns and Powell's pivot ended up having a positive impact on the markets and many hedge funds as a result. The stocks of smaller companies which were especially hard hit during the fourth quarter slightly outperformed the market during the first quarter. Unfortunately, Trump is unpredictable and volatility returned in the second quarter and smaller-cap stocks went back to selling off. We finished compiling the latest 13F filings to get an idea about what hedge funds are thinking about the overall market as well as individual stocks. In this article we will study the hedge fund sentiment to see how those concerns affected their ownership of Wix.Com Ltd (NASDAQ:WIX) during the quarter.
Wix.Com Ltd (NASDAQ:WIX) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 27 hedge funds' portfolios at the end of March. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Allison Transmission Holdings Inc (NYSE:ALSN), New Relic Inc (NYSE:NEWR), and Knight Transportation Inc. (NYSE:KNX) to gather more data points.
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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's take a look at the new hedge fund action encompassing Wix.Com Ltd (NASDAQ:WIX).
How have hedgies been trading Wix.Com Ltd (NASDAQ:WIX)?
Heading into the second quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in WIX 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.
The largest stake in Wix.Com Ltd (NASDAQ:WIX) was held by Steadfast Capital Management, which reported holding $274.1 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $222 million position. Other investors bullish on the company included Sylebra Capital Management, SQN Investors, and Two Sigma Advisors.
Due to the fact that Wix.Com Ltd (NASDAQ:WIX) has faced bearish sentiment from hedge fund managers, it's safe to say that there was a specific group of hedge funds who were dropping their entire stakes by the end of the third quarter. Intriguingly, Dennis Puri and Oliver Keller's Hunt Lane Capital said goodbye to the biggest position of the "upper crust" of funds watched by Insider Monkey, comprising about $15.8 million in stock, and Bruce Garelick's Garelick Capital Partners was right behind this move, as the fund dropped about $11.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks similar to Wix.Com Ltd (NASDAQ:WIX). We will take a look at Allison Transmission Holdings Inc (NYSE:ALSN), New Relic Inc (NYSE:NEWR), Knight-Swift Transportation Holdings Inc. (NYSE:KNX), and Insulet Corporation (NASDAQ:PODD). All of these stocks' market caps resemble WIX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ALSN,28,1169773,2 NEWR,27,379238,-1 KNX,33,385562,7 PODD,20,245751,-2 Average,27,545081,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $545 million. That figure was $961 million in WIX's case. Knight-Swift Transportation Holdings Inc. (NYSE:KNX) is the most popular stock in this table. On the other hand Insulet Corporation (NASDAQ:PODD) is the least popular one with only 20 bullish hedge fund positions. Wix.Com Ltd (NASDAQ:WIX) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on WIX as the stock returned 15.5% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.