Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That's why we pay special attention to hedge fund activity in these stocks.
Zillow Group Inc (NASDAQ:Z) has seen a decrease in activity from the world's largest hedge funds lately. Z was in 22 hedge funds' portfolios at the end of September. There were 36 hedge funds in our database with Z holdings at the end of the previous quarter. Our calculations also showed that Z isn't among the 30 most popular stocks among hedge funds.
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 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 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 review the latest hedge fund action encompassing Zillow Group Inc (NASDAQ:Z).
What have hedge funds been doing with Zillow Group Inc (NASDAQ:Z)?
At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -39% from the second quarter of 2018. By comparison, 24 hedge funds held shares or bullish call options in Z heading into this year. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John H. Scully's SPO Advisory Corp has the largest position in Zillow Group Inc (NASDAQ:Z), worth close to $297.5 million, amounting to 7.3% of its total 13F portfolio. On SPO Advisory Corp's heels is Karthik Sarma of SRS Investment Management, with a $124.6 million position; 2.6% of its 13F portfolio is allocated to the company. Some other peers that hold long positions contain Christopher R. Hansen's Valiant Capital, David Goel and Paul Ferri's Matrix Capital Management and Karthik Sarma's SRS Investment Management.