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Hedge Funds Welcomed Peloton Interactive, Inc. (PTON) With Open Arms

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 third 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 years and analyze what the smart money thinks of Peloton Interactive, Inc. (NASDAQ:PTON) based on that data.

Peloton Interactive, Inc. (NASDAQ:PTON) has experienced an increase in support from the world’s most elite money managers in recent months. Our calculations also showed that PTON isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Ricky Sandler of Eminence Capital

Ricky Sandler of Eminence Capital

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the fresh hedge fund action regarding Peloton Interactive, Inc. (NASDAQ:PTON).

Hedge fund activity in Peloton Interactive, Inc. (NASDAQ:PTON)

At Q3’s end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock. This is a very respectable number for an IPO. Below, you can check out the change in hedge fund sentiment towards PTON over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

PTON_dec2019

The largest stake in Peloton Interactive, Inc. (NASDAQ:PTON) was held by Eminence Capital, which reported holding $105.2 million worth of stock at the end of September. It was followed by Adage Capital Management with a $58.4 million position. Other investors bullish on the company included Woodson Capital Management, Soros Fund Management, and Alyeska Investment Group. In terms of the portfolio weights assigned to each position Woodson Capital Management allocated the biggest weight to Peloton Interactive, Inc. (NASDAQ:PTON), around 7.98% of its portfolio. Boardman Bay Capital Management is also relatively very bullish on the stock, designating 1.84 percent of its 13F equity portfolio to PTON.

As one would reasonably expect, key money managers have been driving this bullishness. Eminence Capital, managed by Ricky Sandler, initiated the most valuable position in Peloton Interactive, Inc. (NASDAQ:PTON). Eminence Capital had $105.2 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also made a $58.4 million investment in the stock during the quarter. The other funds with brand new PTON positions are James Woodson Davis’s Woodson Capital Management, George Soros’s Soros Fund Management, and Anand Parekh’s Alyeska Investment Group.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Peloton Interactive, Inc. (NASDAQ:PTON) but similarly valued. These stocks are BeiGene, Ltd. (NASDAQ:BGNE), Genpact Limited (NYSE:G), China Southern Airlines Co Ltd (NYSE:ZNH), and Albemarle Corporation (NYSE:ALB). This group of stocks’ market valuations match PTON’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BGNE 9 2186184 -3
G 35 862399 9
ZNH 2 12318 1
ALB 17 148538 -1
Average 15.75 802360 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $802 million. That figure was $450 million in PTON’s case. Genpact Limited (NYSE:G) is the most popular stock in this table. On the other hand China Southern Airlines Co Ltd (NYSE:ZNH) is the least popular one with only 2 bullish hedge fund positions. Peloton Interactive, Inc. (NASDAQ:PTON) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on PTON as the stock returned 40.4% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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