At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Stamps.com Inc. (NASDAQ:STMP) makes for a good investment right now.
Is STMP a good stock to buy now? Hedge funds were getting more optimistic. The number of long hedge fund bets inched up by 1 recently. Stamps.com Inc. (NASDAQ:STMP) was in 31 hedge funds' portfolios at the end of September. The all time high for this statistic is 38. Our calculations also showed that STMP isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 30 hedge funds in our database with STMP positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are several gauges investors can use to analyze their holdings. Two of the less known gauges are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outperform the S&P 500 by a superb margin (see the details here).
Ken Fisher FISHER ASSET MANAGEMENT
Ken Fisher of Fisher Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, 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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. You can subscribe to our free daily newsletter on our website. Now we're going to check out the fresh hedge fund action regarding Stamps.com Inc. (NASDAQ:STMP).
Do Hedge Funds Think STMP Is A Good Stock To Buy Now?
At Q3's end, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in STMP over the last 21 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
The largest stake in Stamps.com Inc. (NASDAQ:STMP) was held by Fisher Asset Management, which reported holding $146.8 million worth of stock at the end of September. It was followed by D E Shaw with a $145.7 million position. Other investors bullish on the company included Renaissance Technologies, Arrowstreet Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position G2 Investment Partners Management allocated the biggest weight to Stamps.com Inc. (NASDAQ:STMP), around 6.44% of its 13F portfolio. Simcoe Capital Management is also relatively very bullish on the stock, dishing out 4.76 percent of its 13F equity portfolio to STMP.
As industrywide interest jumped, key money managers have jumped into Stamps.com Inc. (NASDAQ:STMP) headfirst. SG Capital Management, managed by Ken Grossman and Glen Schneider, created the most valuable position in Stamps.com Inc. (NASDAQ:STMP). SG Capital Management had $15 million invested in the company at the end of the quarter. George McCabe's Portolan Capital Management also initiated a $9.8 million position during the quarter. The other funds with brand new STMP positions are Mark Broach's Manatuck Hill Partners, Warren Lammert's Granite Point Capital, and Anthony S. Daffer's Provenire Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Stamps.com Inc. (NASDAQ:STMP) but similarly valued. We will take a look at Simpson Manufacturing Co, Inc. (NYSE:SSD), Bandwidth Inc. (NASDAQ:BAND), Texas Roadhouse Inc (NASDAQ:TXRH), PennyMac Financial Services Inc (NYSE:PFSI), II-VI, Inc. (NASDAQ:IIVI), OneMain Holdings Inc (NYSE:OMF), and MAXIMUS, Inc. (NYSE:MMS). This group of stocks' market caps are similar to STMP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SSD,17,187561,-4 BAND,30,344258,0 TXRH,22,337281,-3 PFSI,31,443555,6 IIVI,24,104148,-4 OMF,33,470569,-4 MMS,22,127113,-4 Average,25.6,287784,-1.9 [/table]
As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $288 million. That figure was $664 million in STMP's case. OneMain Holdings Inc (NYSE:OMF) is the most popular stock in this table. On the other hand Simpson Manufacturing Co, Inc. (NYSE:SSD) is the least popular one with only 17 bullish hedge fund positions. Stamps.com Inc. (NASDAQ:STMP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for STMP is 74.2. 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. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and beat the market again by 16.4 percentage points. Unfortunately STMP wasn't nearly as popular as these 20 stocks and hedge funds that were betting on STMP were disappointed as the stock returned -12.8% since the end of September (through 12/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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