Is Peloton (PTON) 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 Peloton Interactive, Inc. (NASDAQ:PTON) based on that data.

Is Peloton (PTON) stock a buy or sell? Hedge funds were taking a bullish view. The number of long hedge fund bets improved by 5 recently. Peloton Interactive, Inc. (NASDAQ:PTON) was in 63 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 58. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that PTON isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 58 hedge funds in our database with PTON holdings at the end of September.

Bill Miller

Bill Miller of Miller Value Partners

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

Heading into the first quarter of 2021, a total of 63 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards PTON over the last 22 quarters. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Is PTON A Good Stock To Buy?

Among these funds, Tiger Global Management LLC held the most valuable stake in Peloton Interactive, Inc. (NASDAQ:PTON), which was worth $1192.2 million at the end of the fourth quarter. On the second spot was Coatue Management which amassed $775.1 million worth of shares. Whale Rock Capital Management, Renaissance Technologies, and D E Shaw 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 Woodson Capital Management allocated the biggest weight to Peloton Interactive, Inc. (NASDAQ:PTON), around 14.57% of its 13F portfolio. Calixto Global Investors is also relatively very bullish on the stock, setting aside 9.86 percent of its 13F equity portfolio to PTON.

Consequently, some big names were leading the bulls’ herd. Renaissance Technologies,  assembled the largest position in Peloton Interactive, Inc. (NASDAQ:PTON). Renaissance Technologies had $465.2 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also initiated a $121.9 million position during the quarter. The other funds with brand new PTON positions are Catherine D. Wood’s ARK Investment Management, Amish Mehta’s SQN Investors, and Jay Chen’s Himension Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Peloton Interactive, Inc. (NASDAQ:PTON) but similarly valued. We will take a look at Vodafone Group Plc (NASDAQ:VOD), Palantir Technologies Inc. (NYSE:PLTR), Cognizant Technology Solutions Corp (NASDAQ:CTSH), Ross Stores, Inc. (NASDAQ:ROST), Twitter Inc (NYSE:TWTR), TAL Education Group (NYSE:TAL), and Marriott International Inc (NYSE:MAR). This group of stocks’ market values resemble PTON’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VOD 17 745457 -5
PLTR 38 1902514 7
CTSH 46 3517450 1
ROST 57 1308907 11
TWTR 78 2777387 3
TAL 29 1970456 -12
MAR 58 3421401 2
Average 46.1 2234796 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 46.1 hedge funds with bullish positions and the average amount invested in these stocks was $2235 million. That figure was $5666 million in PTON’s case. Twitter Inc (NYSE:TWTR) is the most popular stock in this table. On the other hand Vodafone Group Plc (NASDAQ:VOD) is the least popular one with only 17 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 overall hedge fund sentiment score for PTON is 77.7. 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 PTON wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on PTON were disappointed as the stock returned -28.6% 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.