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Hedge Funds Have Never Been This Bullish On Waitr Holdings Inc. (WTRH)

At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of March 31. In this article, we will use that wealth of knowledge to determine whether or not Waitr Holdings Inc. (NASDAQ:WTRH) makes for a good investment right now.

Waitr Holdings Inc. (NASDAQ:WTRH) investors should pay attention to an increase in enthusiasm from smart money of late. Our calculations also showed that wtrh isn’t among the 30 most popular stocks among hedge funds.

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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Keith Meister, Corvex Capital

Let’s take a look at the latest hedge fund action surrounding Waitr Holdings Inc. (NASDAQ:WTRH).

What does the smart money think about Waitr Holdings Inc. (NASDAQ:WTRH)?

At Q1’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WTRH over the last 15 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with WTRH Positions

Among these funds, Pelham Capital held the most valuable stake in Waitr Holdings Inc. (NASDAQ:WTRH), which was worth $47.9 million at the end of the first quarter. On the second spot was Leucadia National which amassed $47.9 million worth of shares. Moreover, Park West Asset Management, Corvex Capital, and ThornTree Capital Partners were also bullish on Waitr Holdings Inc. (NASDAQ:WTRH), allocating a large percentage of their portfolios to this stock.

Consequently, key hedge funds were leading the bulls’ herd. Honeycomb Asset Management, managed by David Fiszel, established the most outsized position in Waitr Holdings Inc. (NASDAQ:WTRH). Honeycomb Asset Management had $14.7 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also made a $5.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Kahan and Jeremy Kahan’s North Peak Capital, Israel Englander’s Millennium Management, and Mark N. Diker’s Diker Management.

Let’s now review hedge fund activity in other stocks similar to Waitr Holdings Inc. (NASDAQ:WTRH). We will take a look at General American Investors Company, Inc. (NYSE:GAM), MBIA Inc. (NYSE:MBI), Kelly Services, Inc. (NASDAQ:KELYA), and Tutor Perini Corp (NYSE:TPC). This group of stocks’ market caps resemble WTRH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GAM 5 26578 -1
MBI 19 162216 1
KELYA 13 19109 3
TPC 12 17648 5
Average 12.25 56388 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $234 million in WTRH’s case. MBIA Inc. (NYSE:MBI) is the most popular stock in this table. On the other hand General American Investors Company, Inc. (NYSE:GAM) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Waitr Holdings Inc. (NASDAQ:WTRH) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately WTRH wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on WTRH were disappointed as the stock returned -45.2% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.

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

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