Yahoo Finance 10 Reddit’s WallStreetBets Meme Stocks Hedge Funds are Piling Into
In this article, we discuss the 10 Reddit's WallStreetBets meme stocks hedge funds are piling into based on the data of over 800 hedge funds tracked by Insider Monkey. If you want to skip our detailed analysis of these stocks, go directly to the 5 Reddit's WallStreetBets Meme Stocks Hedge Funds are Piling Into.
Users on the Reddit forum WallStreetBets, a group with over 10.5 million members, have been one of the most influential forces in the market over the past six months. The forum is home to many retail investors who use the internet platform to spoil short-selling attempts by hedge funds, often sending the share prices of stocks with weak business fundamentals soaring. These stocks, dubbed meme stocks, have resulted in losses worth billions to hedge funds. These funds now track Reddit forums to shield themselves from meme stock rallies.
In addition to meme stocks, some of which are discussed below in detail, there are some other, perhaps safer, stock options that are popular on the forum as well. These include Tesla, Inc. (NASDAQ: TSLA), Palantir Technologies Inc. (NYSE: PLTR), Apple Inc. (NASDAQ: AAPL), and Shopify Inc. (NYSE: SHOP), among others. However, these usually go unnoticed in the chaos surrounding meme stocks. According to a report in The Wall Street Journal, Melvin Capital Management, one of the most well-known hedge funds on Wall Street, lost $6 billion to meme stocks at the beginning of this year and is still down close to 50% year-to-date.
The number represents just a fraction of the total losses that hedge funds have incurred as a result of the Reddit meme stocks this year. The ten biggest hedge fund casualties of the Reddit short squeeze can be accessed here. However, even as the meme stocks single out losers, they have also produced winners. According to a report published by business news publication Bloomberg, Chinese billionaire Wang Jianlin made more than $675 million from a meme stock rally, spurred by users on WallStreetBets forum, earlier this year.
It remains to be seen whether retail investors can sustain the momentum they have gained in the battle for market supremacy as inflation threatens interest in volatile growth stocks and hedge funds, keen to respond in kind after being scapegoated as the villains of the finance world, try to assert their dominance. The early signs for a hotly contested summer are already there, with meme stocks holding steady at exuberant prices and retail investments in equities touching all-time highs.
The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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With this context in mind, here is our list of the 10 Reddit's WallStreetBets meme stocks hedge funds are piling into. These were ranked keeping in mind the hype on Reddit, hedge fund sentiment, and analyst ratings for each.
These stocks are popular on Reddit's WallStreetBets forum as well as among the over 800 hedge funds tracked by Insider Monkey, as of the end of the first quarter. With each stock we have mentioned the number of hedge funds having stakes in it based on our data.
Reddit's WallStreetBets Meme Stocks Hedge Funds are Piling Into
10. United Microelectronics Corporation (NYSE: UMC)
Number of Hedge Fund Holders: 11
United Microelectronics Corporation (NYSE: UMC) is placed tenth on our list of 10 Reddit's WallStreetBets meme stocks hedge funds are piling into. The company’s shares have returned 245% to investors in the past twelve months. On April 29, investment advisory Macquarie upgraded the stock to Outperform from Neutral with a price target of NT$67.30, up from NT$45.30 before. The firm operates as a semiconductor wafer foundry with business interests spread across the globe.
On June 4, United Microelectronics Corporation (NYSE: UMC) announced sales results for the month of May, reporting that net sales over the month had made the firm over NT$17 billion, an increase of more than 16% year-on-year.
At the end of the first quarter of 2021, 11 hedge funds in the database of Insider Monkey held stakes worth $173 million in United Microelectronics Corporation (NYSE: UMC), down from 12 in the preceding quarter worth $190 million.
Even though the Reddit forums are full of mentions related to stocks like Tesla, Inc. (NASDAQ: TSLA), Palantir Technologies Inc. (NYSE: PLTR), Apple Inc. (NASDAQ: AAPL), and Shopify Inc. (NYSE: SHOP), there is still huge investor interest around United Microelectronics Corporation (NYSE: UMC), one of Reddit's WallStreetBets meme stocks hedge funds are piling into.
9. MicroVision, Inc. (NASDAQ: MVIS)
Number of hedge fund holders: 12
MicroVision, Inc. (NASDAQ: MVIS) stock has returned 882% to investors in the past year. It is ranked ninth on our list of 10 Reddit's WallStreetBets meme stocks hedge funds are piling into. The company makes and sells lidar sensors used by motor companies. It recently joined the Russell 2000 Index. The stock is one of the most mentioned on Reddit forums and was one of the top gainers in the technology market in early June because of this. The share price of the firm jumped 25% in seven days leading to June 11 before taking a breather.
On June 21, MicroVision, Inc. (NASDAQ: MVIS) announced that it entered into an agreement with Craig-Hallum Capital Group for a $140 million at-the-market equity facility. The proceeds from the offering would be used for general corporate purposes.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in MicroVision, Inc. (NASDAQ: MVIS) with 1.2 million shares worth more than $32 million.
MicroVision, Inc. (NASDAQ: MVIS), a Reddit's WallStreetBets meme stock hedge funds are piling into, continues to punch above its weight on the social media, beating the likes of Tesla, Inc. (NASDAQ: TSLA), Palantir Technologies Inc. (NYSE: PLTR), Apple Inc. (NASDAQ: AAPL), and Shopify Inc. (NYSE: SHOP) in terms of number of mentions.
8. GameStop Corp. (NYSE: GME)
Number of Hedge Fund Holders: 13
GameStop Corp. (NYSE: GME) is a video game retailer. It is placed eighth on our list of 10 Reddit's WallStreetBets meme stocks hedge funds are piling into. The company’s shares have offered investors returns exceeding 4,364% over the course of the past twelve months. On July 12, investment advisory Ascendiant raised the price target on the stock to $25 from $10 on the back of expected Reddit-related trading in the coming days and weeks, as well as the bets the company had made in the digital sector.
On June 10, news publication Financial Times reported that hedge funds at the center of the GameStop Corp. (NYSE: GME) short-selling attempt in January had suffered more than $6 billion in losses as stocks favored by Reddit registered record price increases.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in GameStop Corp. (NYSE: GME) with 3.2 million shares worth more than $620 million.
GameStop Corp. (NYSE: GME) has, through the course of the past six months, registered a dramatic stock rally, beating the growth of market leaders like Tesla, Inc. (NASDAQ: TSLA), Palantir Technologies Inc. (NYSE: PLTR), Apple Inc. (NASDAQ: AAPL), and Shopify Inc. (NYSE: SHOP), despite being one of Reddit's WallStreetBets meme stocks hedge funds are piling into.
In its Q1 2021 investor letter, Rhizome Partners, an asset management firm, highlighted a few stocks and GameStop Corp. (NYSE: GME) was one of them. Here is what the fund said:
“The first quarter saw some bizarre market reactions. Game Stop is a heavily shorted legacy video game retailer that saw its stock price rise from $17 to a peak of $483 within a month. It appears that retail investors on a Reddit.com forum called WallStreetBets used memes to create a viral feedback loop of forced buying. Game Stop reached $20 billion in market cap and had more daily trading volume than Apple at one point. The Game Stop short squeeze became a black swan event for the short sellers. Large hedge funds such as Melvin Capital suffered 50% losses during a short period and required emergency capital injections that resulted in costly dilution. Shorting is difficult and introduces a risk of ruin. This is especially true in situations where a large percentage of the float is shorted. We want to remind you that we hedge our portfolio via index puts, sector puts, and sometimes buying puts directly in our own portfolio companies. However, we rarely short because 1) we are not good at it 2) the potential for brain damage is too high and 3) we want to avoid the risk of ruin.”
7. Virgin Galactic Holdings, Inc. (NYSE: SPCE)
Number of Hedge Fund Holders: 17
Virgin Galactic Holdings, Inc. (NYSE: SPCE) is ranked seventh on our list of 10 Reddit's WallStreetBets meme stocks hedge funds are piling into. The stock has offered investors returns exceeding 131% over the course of the past year. The company operates as a private space tourism firm. The stock of the firm has surged more than 8% over the past few hours as Richard Branson, the owner of the firm, completed a test flight on VSS Unity, the suborbital spaceplane meant to take tourists to the edge of space.
On July 12, Ronald Epstein, an analyst at investment advisory Bank of America, assigned the stock of Virgin Galactic Holdings, Inc. (NYSE: SPCE) a price target of $41 price target, affirming that the successful test flight of was already reflected in the market valuation of the firm.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Virgin Galactic Holdings, Inc. (NYSE: SPCE) with 2.8 million shares worth more than $86 million.
Like Tesla, Inc. (NASDAQ: TSLA), Palantir Technologies Inc. (NYSE: PLTR), Apple Inc. (NASDAQ: AAPL), and Shopify Inc. (NYSE: SHOP), Virgin Galactic Holdings, Inc. (NYSE: SPCE) is one of best growth stocks to invest in.
6. AMC Entertainment Holdings, Inc. (NYSE: AMC)
Number of hedge fund holders: 19
AMC Entertainment Holdings, Inc. (NYSE: AMC) is a movie theatre chain based in Kansas. It is placed sixth on our list of 10 Reddit's WallStreetBets meme stocks hedge funds are piling into. The company’s shares have returned 904% to investors in the past year. On May 26, investment advisory CFRA upgraded the stock to Hold from Sell, raising the price target by $15 and placing the firm well above peers in the marketplace, noting that the holiday movie rush and post-pandemic film demand as growth catalysts for the stock.
On July 12, AMC Entertainment Holdings, Inc. (NYSE: AMC) announced that 2.5 million movie goers had attended film screenings at AMC theatres across the United States from Thursday to Sunday, the highest since the pandemic-related lockdowns were enforced in March 2020.
At the end of the first quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes worth $34 million in AMC Entertainment Holdings, Inc. (NYSE: AMC), up from 16 in the preceding quarter worth $24 million.
AMC Entertainment Holdings, Inc. (NYSE: AMC) is one of the most famous Reddit's WallStreetBets meme stocks hedge funds are piling into, even as stocks like Tesla, Inc. (NASDAQ: TSLA), Palantir Technologies Inc. (NYSE: PLTR), Apple Inc. (NASDAQ: AAPL), and Shopify Inc. (NYSE: SHOP) continue to steadily gain traction on Reddit forums.
In its Q4 2020 investor letter, Mittleman Investment Management LLC, an asset management firm, highlighted a few stocks and AMC Entertainment Holdings, Inc. (NYSE: AMC) was one of them. Here is what the fund said:
“AMC Entertainment (AMC) was our only material loser in Q4, dropping from $4.71 to $2.12 (-55%). I planned on discussing here why it was worth at least the $10 per share that my recently reduced estimate of fair value claimed, but since then AMC raised more cash against their UK holdings and then the stock took off due to speculative players from reddit.com getting involved, so we sold it all around $14 during the last week of Jan. 2021. This was a modest profit for most clients, but a loss for some others, depending on when the account began, so check your statements to see where you came out. And yes, I recognize it as being a dose of good luck, which I heartily accept from the universe as it seemed somewhat lacking in the portfolio of late. After the sale of AMC in late January 2021, our exposure to the movie theater business is now exclusively in Canada via Cineplex, which has a 75% market share and much less leverage on its balance sheet.”
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Disclose. None. 10 Reddit's WallStreetBets Meme Stocks Hedge Funds are Piling Into is originally published on Insider Monkey.