We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Planet Fitness Inc (NYSE:PLNT) and determine whether hedge funds skillfully traded this stock.
Planet Fitness Inc (NYSE:PLNT) was in 40 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 47. PLNT has seen an increase in support from the world’s most elite money managers in recent months. There were 34 hedge funds in our database with PLNT holdings at the end of June. Our calculations also showed that PLNT isn’t among the 30 most popular stocks among hedge funds (click for Q3 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. Keeping this in mind let’s take a gander at the latest hedge fund action encompassing Planet Fitness Inc (NYSE:PLNT).
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
Do Hedge Funds Think PLNT Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PLNT over the last 25 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
The largest stake in Planet Fitness Inc (NYSE:PLNT) was held by SRS Investment Management, which reported holding $553.6 million worth of stock at the end of September. It was followed by Soroban Capital Partners with a $251 million position. Other investors bullish on the company included Holocene Advisors, Scopus Asset Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Deep Field Asset Management allocated the biggest weight to Planet Fitness Inc (NYSE:PLNT), around 13.02% of its 13F portfolio. Yost Capital Management is also relatively very bullish on the stock, dishing out 10.08 percent of its 13F equity portfolio to PLNT.
Consequently, some big names were breaking ground themselves. Holocene Advisors, managed by Brandon Haley, initiated the most outsized position in Planet Fitness Inc (NYSE:PLNT). Holocene Advisors had $82.7 million invested in the company at the end of the quarter. Alexander Mitchell’s Scopus Asset Management also made a $61.6 million investment in the stock during the quarter. The other funds with brand new PLNT positions are Phill Gross and Robert Atchinson’s Adage Capital Management, Benjamin A. Smith’s Laurion Capital Management, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Planet Fitness Inc (NYSE:PLNT) but similarly valued. We will take a look at Change Healthcare Inc. (NASDAQ:CHNG), Arrowhead Pharmaceuticals Inc. (NASDAQ:ARWR), Virgin Galactic Holdings, Inc. (NYSE:SPCE), Varonis Systems Inc (NASDAQ:VRNS), First Financial Bankshares Inc (NASDAQ:FFIN), Healthcare Trust Of America Inc (NYSE:HTA), and Mattel, Inc. (NASDAQ:MAT). This group of stocks’ market valuations are similar to PLNT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHNG | 50 | 1557603 | -1 |
| ARWR | 24 | 150783 | -6 |
| SPCE | 16 | 105669 | -2 |
| VRNS | 27 | 298396 | 3 |
| FFIN | 20 | 81284 | 12 |
| HTA | 14 | 381781 | -9 |
| MAT | 34 | 1030578 | 9 |
| Average | 26.4 | 515156 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $515 million. That figure was $1516 million in PLNT’s case. Change Healthcare Inc. (NASDAQ:CHNG) is the most popular stock in this table. On the other hand Healthcare Trust Of America Inc (NYSE:HTA) is the least popular one with only 14 bullish hedge fund positions. Planet Fitness Inc (NYSE:PLNT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PLNT is 71.6. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Hedge funds were also right about betting on PLNT as the stock returned 12.8% since the end of Q3 (through 1/31) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
