Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Godaddy Inc (NYSE:GDDY).
Godaddy Inc (NYSE:GDDY) investors should pay attention to a decrease in hedge fund sentiment in recent months. Godaddy Inc (NYSE:GDDY) was in 37 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 55. There were 39 hedge funds in our database with GDDY holdings at the end of June. Our calculations also showed that GDDY isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let's take a gander at the new hedge fund action encompassing Godaddy Inc (NYSE:GDDY).
Steven Cohen of Point72 Asset Management
Do Hedge Funds Think GDDY Is A Good Stock To Buy Now?
At Q3's end, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from one quarter earlier. By comparison, 44 hedge funds held shares or bullish call options in GDDY a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in Godaddy Inc (NYSE:GDDY) was held by Select Equity Group, which reported holding $707.7 million worth of stock at the end of September. It was followed by BlueSpruce Investments with a $468.4 million position. Other investors bullish on the company included North Peak Capital, Blacksheep Fund Management, and Brahman Capital. In terms of the portfolio weights assigned to each position North Peak Capital allocated the biggest weight to Godaddy Inc (NYSE:GDDY), around 26.69% of its 13F portfolio. Blacksheep Fund Management is also relatively very bullish on the stock, earmarking 20.44 percent of its 13F equity portfolio to GDDY.
Since Godaddy Inc (NYSE:GDDY) has experienced a decline in interest from the smart money, logic holds that there exists a select few fund managers that slashed their positions entirely by the end of the third quarter. At the top of the heap, Andrew Kurita's Kettle Hill Capital Management sold off the largest stake of the 750 funds monitored by Insider Monkey, worth about $24.1 million in stock. Jordan Moelis and Jeff Farroni's fund, Deep Field Asset Management, also dropped its stock, about $21.4 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Godaddy Inc (NYSE:GDDY) but similarly valued. These stocks are FMC Corporation (NYSE:FMC), InterContinental Hotels Group PLC (NYSE:IHG), Trex Company, Inc. (NYSE:TREX), Procore Technologies Inc. (NYSE:PCOR), Westlake Chemical Corporation (NYSE:WLK), Host Hotels and Resorts Inc (NASDAQ:HST), and Darling Ingredients Inc. (NYSE:DAR). All of these stocks' market caps resemble GDDY's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FMC,28,349943,-5 IHG,9,51166,3 TREX,21,222428,-4 PCOR,26,2070478,26 WLK,34,455623,-1 HST,16,178357,-8 DAR,33,658844,-8 Average,23.9,569548,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $570 million. That figure was $2300 million in GDDY's case. Westlake Chemical Corporation (NYSE:WLK) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Godaddy Inc (NYSE:GDDY) is more popular among hedge funds. Our overall hedge fund sentiment score for GDDY is 73.2. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately GDDY wasn't nearly as popular as these 5 stocks and hedge funds that were betting on GDDY were disappointed as the stock returned 0.7% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.