Reddit’s 5 Meme Stocks Ranked From Best to Worst According to Hedge Funds

4. Bed Bath & Beyond Inc. (NASDAQ:BBBY)

Number of Hedge Fund Holders: 15

Bed Bath & Beyond Inc. (NASDAQ:BBBY) is a New Jersey-based company that operates a chain of retail stores, selling domestic merchandise including bed linens, bath items, kitchen textiles, and home furnishings. Bed Bath & Beyond Inc. (NASDAQ:BBBY) is one of the most popular Reddit meme stocks. 

On March 8, Bed Bath & Beyond Inc. (NASDAQ:BBBY) exercised preferred stock warrants that were issued in its previously announced equity offering, resulting in approximately $135 million in gross proceeds. The company has now received a total of $360 million through March 7, 2023. The proceeds from the exercise of warrants will be used to repay outstanding revolving loans, which will create additional liquidity opportunities to support the company’s business operating activities.

Wedbush analyst Seth Basham increased the firm’s price target on Bed Bath & Beyond Inc. (NASDAQ:BBBY) to $0.25 from $0, while maintaining an Underperform rating on the shares on February 8. According to the analyst, Bed Bath & Beyond Inc. (NASDAQ:BBBY) has managed to secure financing for up to $1.125 billion in additional capital, reducing the near-term risk of bankruptcy and giving the company more time to carry out its efforts to turn things around. However, this financing comes at a significant cost to existing shareholders, who could face over 80% dilution from convertible preferred shares and warrants if they are fully executed. As Wedbush sees a low likelihood of the company achieving its 2023 turnaround plan, the firm assigned little-to-no value to the company’s equity on a probability-weighted basis.

According to Insider Monkey’s Q4 data, 15 hedge funds were long Bed Bath & Beyond Inc. (NASDAQ:BBBY), compared to 12 funds in the prior quarter. Ken Griffin’s Citadel Investment Group is a significant position holder in the company, with 1.2 million shares worth $3 million. 

Miller Value Partners made the following comment about Bed Bath & Beyond Inc. (NASDAQ:BBBY) in its Q3 2022 investor letter:

“Bed Bath & Beyond Inc. (NASDAQ:BBBY) saw significant volatility during the quarter as the share price increased from less than $5/share to more than $20/share at one point. Bed Bath’s management has had ongoing challenges with their turnaround plan. With the company balance sheet significantly weakening over the past two quarters and reports of vendor relationships becoming strained, we see significantly less margin of safety. We decided to take advantage of the price strength during the quarter and exited our position at a profit.”