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Hedge Funds Have Never Been This Bullish On Planet Fitness Inc (PLNT)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Planet Fitness Inc (NYSE:PLNT) based on that data.

Planet Fitness Inc (NYSE:PLNT) investors should be aware of an increase in hedge fund sentiment of late. PLNT was in 44 hedge funds’ portfolios at the end of the first quarter of 2020. There were 34 hedge funds in our database with PLNT positions at the end of the previous quarter. Our calculations also showed that PLNT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ricky Sandler of Eminence Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s review the recent hedge fund action encompassing Planet Fitness Inc (NYSE:PLNT).

Hedge fund activity in Planet Fitness Inc (NYSE:PLNT)

At Q1’s end, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from one quarter earlier. On the other hand, there were a total of 25 hedge funds with a bullish position in PLNT a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, SRS Investment Management held the most valuable stake in Planet Fitness Inc (NYSE:PLNT), which was worth $163.6 million at the end of the third quarter. On the second spot was Steadfast Capital Management which amassed $129.5 million worth of shares. Pelham Capital, Valinor Management LLC, and Eminence Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Pelham Capital allocated the biggest weight to Planet Fitness Inc (NYSE:PLNT), around 14.03% of its 13F portfolio. Deep Field Asset Management is also relatively very bullish on the stock, dishing out 9.12 percent of its 13F equity portfolio to PLNT.

As industrywide interest jumped, key money managers were breaking ground themselves. Eminence Capital, managed by Ricky Sandler, established the biggest position in Planet Fitness Inc (NYSE:PLNT). Eminence Capital had $44.1 million invested in the company at the end of the quarter. Richard Scott Greeder’s Broad Bay Capital also made a $26.2 million investment in the stock during the quarter. The following funds were also among the new PLNT investors: Louis Bacon’s Moore Global Investments, Alexander Mitchell’s Scopus Asset Management, and Kamyar Khajavi’s MIK 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 Axon Enterprise, Inc. (NASDAQ:AAXN), Owens Corning (NYSE:OC), Kimco Realty Corp (NYSE:KIM), and Arrow Electronics, Inc. (NYSE:ARW). All of these stocks’ market caps resemble PLNT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AAXN 26 413473 1
OC 30 398573 -17
KIM 22 55233 6
ARW 23 359067 -11
Average 25.25 306587 -5.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $307 million. That figure was $805 million in PLNT’s case. Owens Corning (NYSE:OC) is the most popular stock in this table. On the other hand Kimco Realty Corp (NYSE:KIM) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Planet Fitness Inc (NYSE:PLNT) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on PLNT as the stock returned 29.3% so far in Q2 (through May 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.