Did Hedge Funds Catch A Break With DoorDash, Inc. (DASH)?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 867 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, when the S&P 500 Index was trading around the 4300 level. Since then investors decided to bet on the economic recovery and a stock market rebound even though we experienced a temporary correction in January. In this article you are going to find out whether hedge funds thought DoorDash, Inc. (NYSE:DASH) was a good investment heading into the fourth quarter and how the stock traded in comparison to the top hedge fund picks.

DoorDash, Inc. (NYSE:DASH) was in 42 hedge funds’ portfolios at the end of September. The all time high for this statistic is 45. DASH has seen a decrease in activity from the world’s largest hedge funds in recent months. There were 45 hedge funds in our database with DASH holdings at the end of June. Our calculations also showed that DASH isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Philippe Laffont of Coatue Management

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 we’re going to take a look at the key hedge fund action surrounding DoorDash, Inc. (NYSE:DASH).

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

At third quarter’s end, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in DASH over the last 25 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Among these funds, Tiger Global Management LLC held the most valuable stake in DoorDash, Inc. (NYSE:DASH), which was worth $2275.3 million at the end of the third quarter. On the second spot was Coatue Management which amassed $1947.6 million worth of shares. Lone Pine Capital, SCGE Management, and Whale Rock 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 Himension Capital allocated the biggest weight to DoorDash, Inc. (NYSE:DASH), around 21.46% of its 13F portfolio. Calixto Global Investors is also relatively very bullish on the stock, designating 9.43 percent of its 13F equity portfolio to DASH.

Because DoorDash, Inc. (NYSE:DASH) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there were a few funds that elected to cut their full holdings heading into Q4. At the top of the heap, Anand Desai’s Darsana Capital Partners cut the biggest position of the “upper crust” of funds tracked by Insider Monkey, valued at an estimated $329.9 million in stock, and Andreas Halvorsen’s Viking Global was right behind this move, as the fund cut about $82.7 million worth. These moves are interesting, as total hedge fund interest was cut by 3 funds heading into Q4.

Let’s check out hedge fund activity in other stocks similar to DoorDash, Inc. (NYSE:DASH). We will take a look at CME Group Inc (NASDAQ:CME), Cigna Corporation (NYSE:CI), Westpac Banking Corporation (NYSE:WBK), Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR), CSX Corporation (NYSE:CSX), ABB Ltd (NYSE:ABB), and BioNTech SE (NASDAQ:BNTX). This group of stocks’ market caps are closest to DASH’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 36.3 hedge funds with bullish positions and the average amount invested in these stocks was $1908 million. That figure was $9358 million in DASH’s case. CME Group Inc (NASDAQ:CME) is the most popular stock in this table. On the other hand Westpac Banking Corporation (NYSE:WBK) is the least popular one with only 6 bullish hedge fund positions. DoorDash, Inc. (NYSE:DASH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for DASH is 61. 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, DASH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on DASH were disappointed as the stock returned -44.9% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.

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