In this article we will check out the progression of hedge fund sentiment towards Chewy, Inc. (NYSE:CHWY) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Chewy, Inc. (NYSE:CHWY) a healthy stock for your portfolio? Investors who are in the know are getting more optimistic. The number of long hedge fund positions went up by 1 lately. Our calculations also showed that CHWY 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). CHWY was in 36 hedge funds’ portfolios at the end of March. There were 35 hedge funds in our database with CHWY holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most investors, hedge funds are seen as unimportant, old investment tools of years past. While there are greater than 8000 funds trading at the moment, Our experts hone in on the moguls of this group, about 850 funds. These investment experts command the majority of the smart money’s total asset base, and by paying attention to their unrivaled equity investments, Insider Monkey has formulated numerous investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. 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 take a peek at the key hedge fund action encompassing Chewy, Inc. (NYSE:CHWY).
What does smart money think about Chewy, Inc. (NYSE:CHWY)?
At the end of the first quarter, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CHWY over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Tybourne Capital Management held the most valuable stake in Chewy, Inc. (NYSE:CHWY), which was worth $131.8 million at the end of the third quarter. On the second spot was Zevenbergen Capital Investments which amassed $55.2 million worth of shares. Marshall Wace LLP, Lone Pine Capital, and Tiger Global Management LLC 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 Portsea Asset Management allocated the biggest weight to Chewy, Inc. (NYSE:CHWY), around 13.95% of its 13F portfolio. Rip Road Capital is also relatively very bullish on the stock, dishing out 10.03 percent of its 13F equity portfolio to CHWY.
With a general bullishness amongst the heavyweights, key money managers have jumped into Chewy, Inc. (NYSE:CHWY) headfirst. Tybourne Capital Management, managed by Eashwar Krishnan, initiated the largest position in Chewy, Inc. (NYSE:CHWY). Tybourne Capital Management had $131.8 million invested in the company at the end of the quarter. Renaissance Technologies also made a $18.4 million investment in the stock during the quarter. The other funds with brand new CHWY positions are Cyrus de Weck’s Portsea Asset Management, Brett Barakett’s Tremblant Capital, and Sander Gerber’s Hudson Bay Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Chewy, Inc. (NYSE:CHWY) but similarly valued. We will take a look at ORIX Corporation (NYSE:IX), Akamai Technologies, Inc. (NASDAQ:AKAM), The Cooper Companies, Inc. (NYSE:COO), and Best Buy Co., Inc. (NYSE:BBY). All of these stocks’ market caps match CHWY’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $582 million. That figure was $493 million in CHWY’s case. Akamai Technologies, Inc. (NASDAQ:AKAM) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 4 bullish hedge fund positions. Chewy, Inc. (NYSE:CHWY) is not the most popular stock in this group but hedge fund interest is still above average. 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 gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on CHWY, though not to the same extent, as the stock returned 18.5% during the first two months of the second quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.