Hedge Funds Are Betting On Planet Fitness Inc (PLNT)

At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

Planet Fitness Inc (NYSE:PLNT) shareholders have witnessed an increase in enthusiasm from smart money recently. PLNT was in 18 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with PLNT holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Monro Muffler Brake Inc (NASDAQ:MNRO), Golar LNG Limited (USA) (NASDAQ:GLNG), and Parkway Properties Inc (NYSE:PKY) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What does the smart money think about Planet Fitness Inc (NYSE:PLNT)?

Heading into the fourth quarter of 2016, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a gain of 13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards PLNT over the last 5 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Marshall Wace LLP, led by Paul Marshall and Ian Wace, holds the largest position in Planet Fitness Inc (NYSE:PLNT). Marshall Wace LLP has a $24.2 million position in the stock. The second most bullish fund manager is Ken Griffin of Citadel Investment Group, with a $17.4 million position. Remaining peers that hold long positions include Matthew A. Weatherbie’s Weatherbie Capital, Principal Global Investors’ Columbus Circle Investors and Jim Simons’ Renaissance Technologies. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As industrywide interest jumped, key hedge funds have been driving this bullishness. Columbus Circle Investors, led by Principal Global Investors, created the most outsized position in Planet Fitness Inc (NYSE:PLNT). Columbus Circle Investors had $7.8 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser’s Magnetar Capital also made a $4.1 million investment in the stock during the quarter. The following funds were also among the new PLNT investors: Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, Brian Taylor’s Pine River Capital Management, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

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 Monro Muffler Brake Inc (NASDAQ:MNRO), Golar LNG Limited (USA) (NASDAQ:GLNG), Parkway Properties Inc (NYSE:PKY), and Granite Construction Inc. (NYSE:GVA). All of these stocks’ market caps are closest to PLNT’s market cap.

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 $196 million. That figure was $93 million in PLNT’s case. Golar LNG Limited (USA) (NASDAQ:GLNG) is the most popular stock in this table. On the other hand Parkway Properties Inc (NYSE:PKY) is the least popular one with only 11 bullish hedge fund positions. Planet Fitness Inc (NYSE:PLNT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard GLNG might be a better candidate to consider taking a long position in.

Disclosure: None