Is CHWY Stock A Buy or Sell?

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 fourth 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 5 years and analyze what the smart money thinks of Chewy, Inc. (NYSE:CHWY) based on that data.

Is CHWY stock a buy or sell? Chewy, Inc. (NYSE:CHWY) shareholders have witnessed a decrease in activity from the world’s largest hedge funds recently. Chewy, Inc. (NYSE:CHWY) was in 38 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 46. There were 46 hedge funds in our database with CHWY holdings at the end of September. Our calculations also showed that CHWY isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Glen Kacher of Light Street Capital

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

At the end of the fourth quarter, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards CHWY over the last 22 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.

According to Insider Monkey’s hedge fund database, Eashwar Krishnan’s Tybourne Capital Management has the biggest position in Chewy, Inc. (NYSE:CHWY), worth close to $143.8 million, accounting for 3% of its total 13F portfolio. The second most bullish fund manager is Nancy Zevenbergen of Zevenbergen Capital Investments, with a $121.3 million position; the fund has 2.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish include D. E. Shaw’s D E Shaw, Renaissance Technologies and Glen Kacher’s Light Street Capital. In terms of the portfolio weights assigned to each position Rip Road Capital allocated the biggest weight to Chewy, Inc. (NYSE:CHWY), around 8.83% of its 13F portfolio. Berylson Capital Partners is also relatively very bullish on the stock, dishing out 4.1 percent of its 13F equity portfolio to CHWY.

Since Chewy, Inc. (NYSE:CHWY) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of hedge funds that slashed their positions entirely last quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dropped the biggest stake of all the hedgies tracked by Insider Monkey, totaling close to $19.2 million in stock, and Matthew L Pinz’s Pinz Capital was right behind this move, as the fund dropped about $6.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 8 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Chewy, Inc. (NYSE:CHWY). These stocks are MSCI Inc (NYSE:MSCI), Brown-Forman Corporation (NYSE:BF), ING Groep N.V. (NYSE:ING), Sempra Energy (NYSE:SRE), Eni SpA (NYSE:E), Fiat Chrysler Automobiles NV (NYSE:FCAU), and CoStar Group Inc (NASDAQ:CSGP). All of these stocks’ market caps resemble CHWY’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MSCI 41 984592 -6
BF 29 1575074 -3
ING 9 397074 0
SRE 33 778325 1
E 4 42161 -1
FCAU 15 223893 -5
CSGP 51 2882489 -4
Average 26 983373 -2.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $983 million. That figure was $729 million in CHWY’s case. CoStar Group Inc (NASDAQ:CSGP) is the most popular stock in this table. On the other hand Eni SpA (NYSE:E) 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 overall hedge fund sentiment score for CHWY is 58. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and beat the market again by 0.8 percentage points. Unfortunately CHWY wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on CHWY were disappointed as the stock returned -8.2% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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