Here is What Hedge Funds Think About Bed Bath & Beyond Inc. (BBBY)

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was Bed Bath & Beyond Inc. (NASDAQ:BBBY).

Bed Bath & Beyond Inc. (NASDAQ:BBBY) has experienced a decrease in enthusiasm from smart money recently. Bed Bath & Beyond Inc. (NASDAQ:BBBY) was in 23 hedge funds’ portfolios at the end of March. The all time high for this statistic is 34. Our calculations also showed that BBBY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the eyes of most market participants, hedge funds are viewed as underperforming, outdated investment vehicles of years past. While there are more than 8000 funds trading today, We hone in on the masters of this group, around 850 funds. These money managers manage bulk of the smart money’s total asset base, and by shadowing their unrivaled stock picks, Insider Monkey has deciphered various investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s view the new hedge fund action surrounding Bed Bath & Beyond Inc. (NASDAQ:BBBY).

Do Hedge Funds Think BBBY Is A Good Stock To Buy Now?

At the end of the first quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -30% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in BBBY over the last 23 quarters. 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, Contrarius Investment Management held the most valuable stake in Bed Bath & Beyond Inc. (NASDAQ:BBBY), which was worth $72.1 million at the end of the fourth quarter. On the second spot was D E Shaw which amassed $65.5 million worth of shares. Arrowstreet Capital, Renaissance Technologies, and Citadel Investment Group 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 Contrarius Investment Management allocated the biggest weight to Bed Bath & Beyond Inc. (NASDAQ:BBBY), around 4.08% of its 13F portfolio. Diametric Capital is also relatively very bullish on the stock, designating 0.5 percent of its 13F equity portfolio to BBBY.

Due to the fact that Bed Bath & Beyond Inc. (NASDAQ:BBBY) has witnessed a decline in interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of funds that slashed their entire stakes by the end of the first quarter. Intriguingly, Mike Masters’s Masters Capital Management cut the biggest position of the 750 funds watched by Insider Monkey, worth about $26.6 million in stock, and Noam Gottesman’s GLG Partners was right behind this move, as the fund said goodbye to about $11.7 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 10 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks similar to Bed Bath & Beyond Inc. (NASDAQ:BBBY). We will take a look at Cronos Group Inc. (NASDAQ:CRON), Ambarella Inc (NASDAQ:AMBA), Dana Incorporated (NYSE:DAN), CareDx, Inc. (NASDAQ:CDNA), Mantech International Corp (NASDAQ:MANT), Rogers Corporation (NYSE:ROG), and Grocery Outlet Holding Corp. (NASDAQ:GO). This group of stocks’ market valuations resemble BBBY’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CRON 10 126181 -1
AMBA 35 286944 -1
DAN 26 545924 -2
CDNA 23 693239 3
MANT 14 34971 3
ROG 17 228144 -3
GO 15 56182 -2
Average 20 281655 -0.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $282 million. That figure was $314 million in BBBY’s case. Ambarella Inc (NASDAQ:AMBA) is the most popular stock in this table. On the other hand Cronos Group Inc. (NASDAQ:CRON) is the least popular one with only 10 bullish hedge fund positions. Bed Bath & Beyond Inc. (NASDAQ:BBBY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BBBY is 41.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately BBBY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BBBY were disappointed as the stock returned -6.8% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Follow Bed Bath & Beyond Inc (NASDAQ:BBBY)

Suggested Articles:

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