At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards ANGI Homeservices Inc (NASDAQ:ANGI) at the end of the second quarter and determine whether the smart money was really smart about this stock.
ANGI Homeservices Inc (NASDAQ:ANGI) was in 48 hedge funds' portfolios at the end of June. The all time high for this statistics is 33. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ANGI investors should pay attention to an increase in hedge fund interest lately. There were 27 hedge funds in our database with ANGI positions at the end of the first quarter. Our calculations also showed that ANGI isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Clint Carlson of Carlson Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. 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. Now let's take a look at the new hedge fund action regarding ANGI Homeservices Inc (NASDAQ:ANGI).
Hedge fund activity in ANGI Homeservices Inc (NASDAQ:ANGI)
At Q2's end, a total of 48 of the hedge funds tracked by Insider Monkey were long this stock, a change of 78% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in ANGI over the last 20 quarters. With the smart money's sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Is ANGI A Good Stock To Buy?
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Luxor Capital Group, managed by Christian Leone, holds the biggest position in ANGI Homeservices Inc (NASDAQ:ANGI). Luxor Capital Group has a $84.1 million position in the stock, comprising 2.2% of its 13F portfolio. On Luxor Capital Group's heels is Renaissance Technologies, which holds a $66.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish consist of Alexander Mitchell's Scopus Asset Management, Dennis Hong's ShawSpring Partners and Joshua Nash's Ulysses Management. In terms of the portfolio weights assigned to each position ShawSpring Partners allocated the biggest weight to ANGI Homeservices Inc (NASDAQ:ANGI), around 8.34% of its 13F portfolio. Clearfield Capital is also relatively very bullish on the stock, designating 7.54 percent of its 13F equity portfolio to ANGI.
As aggregate interest increased, specific money managers have jumped into ANGI Homeservices Inc (NASDAQ:ANGI) headfirst. Scopus Asset Management, managed by Alexander Mitchell, initiated the biggest position in ANGI Homeservices Inc (NASDAQ:ANGI). Scopus Asset Management had $44.7 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $29 million position during the quarter. The other funds with brand new ANGI positions are Steve Cohen's Point72 Asset Management, Clint Carlson's Carlson Capital, and Dennis Puri and Oliver Keller's Hunt Lane Capital.
Let's check out hedge fund activity in other stocks similar to ANGI Homeservices Inc (NASDAQ:ANGI). These stocks are Manhattan Associates, Inc. (NASDAQ:MANH), Canopy Growth Corporation (NYSE:CGC), Post Holdings Inc (NYSE:POST), Five Below Inc (NASDAQ:FIVE), NovoCure Limited (NASDAQ:NVCR), Enphase Energy Inc (NASDAQ:ENPH), and Tandem Diabetes Care Inc (NASDAQ:TNDM). This group of stocks' market values are closest to ANGI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MANH,15,287947,-5 CGC,11,10644,1 POST,34,1240001,3 FIVE,42,988706,11 NVCR,27,384434,0 ENPH,40,716678,5 TNDM,32,401577,4 Average,28.7,575712,2.7 [/table]
As you can see these stocks had an average of 28.7 hedge funds with bullish positions and the average amount invested in these stocks was $576 million. That figure was $668 million in ANGI's case. Five Below Inc (NASDAQ:FIVE) is the most popular stock in this table. On the other hand Canopy Growth Corporation (NYSE:CGC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks ANGI Homeservices Inc (NASDAQ:ANGI) is more popular among hedge funds. Our overall hedge fund sentiment score for ANGI is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 33% in 2020 through the end of August and still managed to beat the market by 23.2 percentage points. Hedge funds were also right about betting on ANGI, though not to the same extent, as the stock returned 14.2% since the end of June and outperformed the market as well.
