While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Chegg Inc (NYSE:CHGG).
Is Chegg Inc (NYSE:CHGG) worth your attention right now? The best stock pickers were betting on the stock. The number of long hedge fund bets improved by 1 lately. Chegg Inc (NYSE:CHGG) was in 39 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 45. Our calculations also showed that CHGG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 38 hedge funds in our database with CHGG positions at the end of the second quarter.
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. With all of this in mind let’s take a glance at the new hedge fund action surrounding Chegg Inc (NYSE:CHGG).
Ken Griffin of Citadel Investment Group
Do Hedge Funds Think CHGG Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CHGG over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Chegg Inc (NYSE:CHGG) was held by Zevenbergen Capital Investments, which reported holding $80.7 million worth of stock at the end of September. It was followed by Sylebra Capital Management with a $77.8 million position. Other investors bullish on the company included Polar Capital, Citadel Investment Group, and Polar Capital. In terms of the portfolio weights assigned to each position Selkirk Management allocated the biggest weight to Chegg Inc (NYSE:CHGG), around 8.31% of its 13F portfolio. Stony Point Capital is also relatively very bullish on the stock, setting aside 5.63 percent of its 13F equity portfolio to CHGG.
As one would reasonably expect, some big names have jumped into Chegg Inc (NYSE:CHGG) headfirst. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, assembled the most valuable position in Chegg Inc (NYSE:CHGG). Polar Capital had $31.2 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also made a $4.4 million investment in the stock during the quarter. The following funds were also among the new CHGG investors: Jinghua Yan’s TwinBeech Capital, Mika Toikka’s AlphaCrest Capital Management, and Qing Li’s Sciencast Management.
Let’s also examine hedge fund activity in other stocks similar to Chegg Inc (NYSE:CHGG). We will take a look at Hubbell Incorporated (NYSE:HUBB), Wynn Resorts, Limited (NASDAQ:WYNN), CubeSmart (NYSE:CUBE), Penumbra Inc (NYSE:PEN), A. O. Smith Corporation (NYSE:AOS), Manhattan Associates, Inc. (NASDAQ:MANH), and McAfee Corp. (NASDAQ:MCFE). All of these stocks’ market caps are similar to CHGG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HUBB | 18 | 571249 | 3 |
| WYNN | 32 | 282672 | -5 |
| CUBE | 22 | 225467 | 4 |
| PEN | 33 | 553799 | 3 |
| AOS | 29 | 564878 | 3 |
| MANH | 25 | 475224 | -3 |
| MCFE | 31 | 330697 | 13 |
| Average | 27.1 | 429141 | 2.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.1 hedge funds with bullish positions and the average amount invested in these stocks was $429 million. That figure was $514 million in CHGG’s case. Penumbra Inc (NYSE:PEN) is the most popular stock in this table. On the other hand Hubbell Incorporated (NYSE:HUBB) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Chegg Inc (NYSE:CHGG) is more popular among hedge funds. Our overall hedge fund sentiment score for CHGG is 82. 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. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately CHGG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CHGG were disappointed as the stock returned -59.1% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
Follow Chegg Inc (NYSE:CHGG)
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Disclosure: None. This article was originally published at Insider Monkey.
