The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 866 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31st holdings, data that is available nowhere else. Should you consider The RealReal, Inc. (NASDAQ:REAL) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
The RealReal, Inc. (NASDAQ:REAL) was in 24 hedge funds’ portfolios at the end of March. The all time high for this statistic is 33. REAL investors should be aware of a decrease in hedge fund sentiment in recent months. There were 32 hedge funds in our database with REAL holdings at the end of December. Our calculations also showed that REAL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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 we’re going to take a look at the recent hedge fund action surrounding The RealReal, Inc. (NASDAQ:REAL).
Do Hedge Funds Think REAL Is A Good Stock To Buy Now?
At the end of March, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards REAL over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Among these funds, Miller Value Partners held the most valuable stake in The RealReal, Inc. (NASDAQ:REAL), which was worth $78.7 million at the end of the fourth quarter. On the second spot was Broad Peak Investment Holdings which amassed $63.7 million worth of shares. Millennium Management, Citadel Investment Group, and Woodson Capital Management 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 Broad Peak Investment Holdings allocated the biggest weight to The RealReal, Inc. (NASDAQ:REAL), around 3.74% of its 13F portfolio. Woodson Capital Management is also relatively very bullish on the stock, setting aside 2.52 percent of its 13F equity portfolio to REAL.
Because The RealReal, Inc. (NASDAQ:REAL) has experienced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of fund managers that elected to cut their entire stakes by the end of the first quarter. Interestingly, C. Ashton Newhall and James Lim’s Greenspring Associates dropped the largest investment of the 750 funds watched by Insider Monkey, valued at close to $11.7 million in stock. Joseph Samuels’s fund, Islet Management, also dumped its stock, about $9.3 million worth. These moves are interesting, as total hedge fund interest dropped by 8 funds by the end of the first quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as The RealReal, Inc. (NASDAQ:REAL) but similarly valued. These stocks are Chesapeake Utilities Corporation (NYSE:CPK), EHang Holdings Limited (NASDAQ:EH), Liberty Oilfield Services Inc. (NYSE:LBRT), bluebird bio Inc (NASDAQ:BLUE), Talend S.A. (NASDAQ:TLND), Prelude Therapeutics Incorporated (NASDAQ:PRLD), and NMI Holdings Inc (NASDAQ:NMIH). This group of stocks’ market values match REAL’s market value.
|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 17.7 hedge funds with bullish positions and the average amount invested in these stocks was $432 million. That figure was $399 million in REAL’s case. Talend S.A. (NASDAQ:TLND) is the most popular stock in this table. On the other hand EHang Holdings Limited (NASDAQ:EH) is the least popular one with only 4 bullish hedge fund positions. The RealReal, Inc. (NASDAQ:REAL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for REAL is 43.2. 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 REAL wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on REAL were disappointed as the stock returned -26.8% 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.
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Disclosure: None. This article was originally published at Insider Monkey.