5 Cheap Penny Stocks to Buy According to Hedge Funds

1. Farfetch Limited (NYSE:FTCH)

Number of Hedge Fund Holders: 44

P/E Ratio as of March 29: 5.90

Farfetch Limited (NYSE:FTCH) is one of the best cheap penny stocks to invest in according to smart investors. The company operates a platform for the luxury fashion industry in the United States, the United Kingdom, and internationally. It has three segments – Digital Platform, Brand Platform, and In-Store. The company reported a revenue of $629 million in the fourth quarter of 2022, beating Wall Street estimates by $2.04 million. 

On March 24, JMP Securities analyst Nicholas Jones initiated coverage of Farfetch Limited (NYSE:FTCH) with a Market Perform rating and no price target. While Farfetch Limited (NYSE:FTCH) is a significant player in the personal luxury retail industry, the analyst believes that challenges in the upper funnel trends and low consumer savings rates may limit the company’s growth in the near future. Moreover, since China is driving most of the growth in the luxury retail industry, the analyst is looking for evidence that Farfetch Limited (NYSE:FTCH) is expanding its business in the country successfully. 

According to Insider Monkey’s fourth quarter database, 44 hedge funds were bullish on Farfetch Limited (NYSE:FTCH), compared to 50 funds in the prior quarter. Bill Miller’s Miller Value Partners is the biggest position holder in the company, with 6.85 million shares worth $32.4 million. 

Polen U.S. SMID Company Growth Strategy made the following comment about Farfetch Limited (NYSE:FTCH) in its Q4 2022 investor letter:

“Farfetch Limited (NYSE:FTCH) is an online marketplace for luxury goods. The stock was down -35% on the back of an investor day where management issued targets that implied decelerating growth. While this is a disappointing development in what has shaped into a disappointing year for the stock, we are maintaining our position with a focus on the long-term opportunity. Luxury fashion is still in a very nascent stage of migrating online. Farfetch—through partnerships and deep relationships it has built over many years— remains very well positioned to benefit from this trend.”

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