A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30th, so let’s proceed with the discussion of the hedge fund sentiment on 2U Inc (NASDAQ:TWOU).
2U Inc (NASDAQ:TWOU) investors should pay attention to a decrease in support from the world’s most elite money managers of late. 2U Inc (NASDAQ:TWOU) was in 22 hedge funds’ portfolios at the end of September. The all time high for this statistic is 25. Our calculations also showed that TWOU isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now let’s analyze the latest hedge fund action surrounding 2U Inc (NASDAQ:TWOU).
Cathie Wood of ARK Investment Management
Do Hedge Funds Think TWOU Is A Good Stock To Buy Now?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -12% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards TWOU over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, ARK Investment Management was the largest shareholder of 2U Inc (NASDAQ:TWOU), with a stake worth $282.4 million reported as of the end of September. Trailing ARK Investment Management was Greenvale Capital, which amassed a stake valued at $143 million. Greenvale Capital, D E Shaw, and Melqart Asset 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 Greenvale Capital allocated the biggest weight to 2U Inc (NASDAQ:TWOU), around 17.24% of its 13F portfolio. Greenvale Capital is also relatively very bullish on the stock, earmarking 4.05 percent of its 13F equity portfolio to TWOU.
Because 2U Inc (NASDAQ:TWOU) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers who were dropping their entire stakes by the end of the third quarter. Interestingly, Mark Coe’s Intrinsic Edge Capital sold off the largest investment of the “upper crust” of funds tracked by Insider Monkey, valued at close to $21.5 million in stock, and Renaissance Technologies was right behind this move, as the fund sold off about $8.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 3 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as 2U Inc (NASDAQ:TWOU) but similarly valued. We will take a look at Piper Sandler Companies (NYSE:PIPR), Covetrus, Inc. (NASDAQ:CVET), Fulton Financial Corp (NASDAQ:FULT), Privia Health Group Inc. (NASDAQ:PRVA), Pacira Biosciences Inc (NASDAQ:PCRX), Arcus Biosciences, Inc. (NYSE:RCUS), and Albany International Corp. (NYSE:AIN). All of these stocks’ market caps match TWOU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PIPR | 13 | 63954 | 1 |
| CVET | 21 | 131291 | 3 |
| FULT | 14 | 53970 | 3 |
| PRVA | 12 | 83917 | 12 |
| PCRX | 24 | 425603 | 1 |
| RCUS | 21 | 573893 | -1 |
| AIN | 17 | 38508 | 5 |
| Average | 17.4 | 195877 | 3.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $196 million. That figure was $545 million in TWOU’s case. Pacira Biosciences Inc (NASDAQ:PCRX) is the most popular stock in this table. On the other hand Privia Health Group Inc. (NASDAQ:PRVA) is the least popular one with only 12 bullish hedge fund positions. 2U Inc (NASDAQ:TWOU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TWOU is 70.1. 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 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately TWOU wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on TWOU were disappointed as the stock returned -40.2% since the end of September (through 12/31) 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.
