Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Is Planet Fitness Inc (NYSE:PLNT) a healthy stock for your portfolio? The smart money looks to be rather confident. The number of long hedge fund positions in the newly-listed company stood at 14 at the end of September, with their positions being worth $62.29 million. Shares of the small-cap operator of fitness centers are down by 2% since the company went public in early August. At the end of this article we will examine similar-sized companies such as Healthequity Inc (NASDAQ:HQY), Mack Cali Realty Corp (NYSE:CLI), and Matson, Inc. (NYSE:MATX) to see how the interest in Planet Fitness compares to those companies.
Follow Planet Fitness Inc.
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According to most traders, hedge funds are assumed to be unimportant, old financial tools of years past. While there are over 8,000 funds trading today, we look at the leaders of this group, around 700 funds. These investment experts watch over the majority of the smart money’s total capital, and by watching their unrivaled investments, Insider Monkey has come up with a few investment strategies that have historically defeated Mr. Market. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Now, we’re going to take a look at the fresh action encompassing Planet Fitness Inc (NYSE:PLNT).
Hedge fund activity in Planet Fitness Inc (NYSE:PLNT)
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, which had its IPO during the quarter. According to Insider Monkey’s hedge fund database, Apex Capital, managed by Sanford J. Colen, holds the most valuable position in Planet Fitness Inc (NYSE:PLNT). Apex Capital has a $19.9 million position in the stock, comprising 1.9% of its 13F portfolio. On Apex Capital’s heels is Citadel Investment Group, led by Ken Griffin, holding a $9.5 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish encompass Legg Mason Capital (now a part of ClearBridge), Matthew A. Weatherbie’s Weatherbie Capital, and Alexander Mitchell’s Scopus Asset Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Planet Fitness Inc (NYSE:PLNT) but similarly valued. We will take a look at Healthequity Inc (NASDAQ:HQY), Mack Cali Realty Corp (NYSE:CLI), Matson, Inc. (NYSE:MATX), and Alexander & Baldwin Inc (NYSE:ALEX). This group of stocks’ market valuations match PLNT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HQY | 13 | 84565 | 1 |
| CLI | 21 | 123021 | 0 |
| MATX | 16 | 46522 | -1 |
| ALEX | 12 | 152236 | -7 |
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $102 million. That figure was $62 million in PLNT’s case. Mack Cali Realty Corp (NYSE:CLI) is the most popular stock in this table. On the other hand Alexander & Baldwin Inc (NYSE:ALEX) is the least popular one with only 12 bullish hedge fund positions. Planet Fitness Inc (NYSE:PLNT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CLI might be a better candidate to consider a long position in.
