L1 Capital Long Short Fund released its Q3 2020 Investor Letter, a copy of which you can download here. The Fund posted a return of 8.8% for the quarter, underperforming the S&P 500 Index which returned 8.93% in the same quarter. You should check out L1 Capital Long Short Fund’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.
In the Q3 2020 Investor Letter, L1 Capital Long Short Fund highlighted a few stocks and Bed Bath & Beyond Inc (NASDAQ:BBBY) is one of them. Bed Bath & Beyond Inc (NASDAQ:BBBY) is a retail-store company. In the last one year, Bed Bath & Beyond Inc (NASDAQ:BBBY) stock gained 39.3% and on January 7th it had a closing price of $18.73. Here is what L1 Capital Long Short Fund said:
“Bed Bath & Beyond (BBBY U.S. Long +41%) has been a very strong performer for the Fund over the quarter. BBBY is a major U.S. retailer that has been struggling from many years of mismanagement, poor capital allocation and a lacklustre customer experience. Mark Tritton (a fellow Australian) was appointed CEO in November 2019 and has spent the past year replacing senior management with a proven team of high calibre executives that are now set to overhaul all aspects of the business. Tritton is an exceptional retail executive who had been instrumental in the turnaround of Target U.S. (he was the Head of Merchandising). At the time we bought in to BBBY earlier this year, the company was widely expected to go bankrupt. Short interest was an astounding 60%, almost every sell-side analyst rated the stock a “sell” or “neutral” and the shares had already fallen from $75 in 2015 to less than $5 by March this year. We bought in at around $9.20 in July, believing that the shares had enormous upside even if the new management team only delivered on their initial cost out targets and non-core asset sales. BBBY has its strategy day on October 28, where management is expected to lay out their plans for improving sales trends, enhancing the digital offering, reducing costs and outlining their capital management plans. Despite the rally in the shares to around $15 by quarter end, we continue to see very large upside in the stock given numerous areas of low hanging fruit (such as better product sourcing, higher quality private label products, more efficient supply chain, closing loss-making stores, cutting head office costs, selling non-core assets, etc). We also expect management will flag large scale buybacks that will demonstrate both balance sheet strength and management’s optimism in the future of the business.”
In Q3 2020, the number of bullish hedge fund positions on Bed Bath & Beyond Inc (NASDAQ:BBBY) stock decreased by about 3% from the previous quarter (see the chart here), so a number of other hedge fund managers don’t believe in BBBY’s growth potential. Our calculations showed that Bed Bath & Beyond Inc (NASDAQ:BBBY) isn’t ranked among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
Video: Top 5 Stocks Among Hedge Funds
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Disclosure: None. This article is originally published at Insider Monkey.