Were Hedge Funds Right About Piling Into Peloton Interactive (PTON)?

At Insider Monkey, we pore over the filings of nearly 887 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31st. In this article, we will use that wealth of knowledge to determine whether or not Peloton Interactive, Inc. (NASDAQ:PTON) makes for a good investment right now.

Is Peloton Interactive, Inc. (NASDAQ:PTON) a buy here? Hedge funds were in a bullish mood. The number of long hedge fund positions moved up 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).

To most stock holders, hedge funds are viewed as unimportant, old financial tools of years past. While there are over 8000 funds in operation at the moment, We choose to focus on the masters of this club, approximately 850 funds. These money managers direct the lion’s share of the smart money’s total asset base, and by watching their highest performing investments, Insider Monkey has discovered numerous investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .


Philippe Laffont of Coatue Management

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

At fourth quarter’s end, a total of 63 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards PTON over the last 22 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.

Is PTON A Good Stock To Buy?

More specifically, Tiger Global Management LLC was the largest shareholder of Peloton Interactive, Inc. (NASDAQ:PTON), with a stake worth $1192.2 million reported as of the end of December. Trailing Tiger Global Management LLC was Coatue Management, which amassed a stake valued at $775.1 million. 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, designating 9.86 percent of its 13F equity portfolio to PTON.

As industrywide interest jumped, key hedge funds have jumped into Peloton Interactive, Inc. (NASDAQ:PTON) headfirst. Renaissance Technologies,  initiated 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 new positions in the stock 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 similar to Peloton Interactive, Inc. (NASDAQ:PTON). 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). All of these stocks’ market caps are similar to PTON’s market cap.

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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and beat the market again by 1.6 percentage points. Unfortunately PTON wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on PTON were disappointed as the stock returned -35.2% since the end of December (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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.