We at Insider Monkey have gone over 867 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Cazoo Group Ltd (NYSE:CZOO) based on that data.
Is Cazoo Group Ltd (NYSE:CZOO) undervalued? Money managers were turning bullish. The number of long hedge fund positions improved by 32 in recent months. Cazoo Group Ltd (NYSE:CZOO) was in 32 hedge funds’ portfolios at the end of September. Our calculations also showed that CZOO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Robert Pohly of Samlyn Capital
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 we’re going to check out the fresh hedge fund action regarding Cazoo Group Ltd (NYSE:CZOO).
Do Hedge Funds Think CZOO Is A Good Stock To Buy Now?
At third quarter’s end, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 32 from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in CZOO a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, D1 Capital Partners held the most valuable stake in Cazoo Group Ltd (NYSE:CZOO), which was worth $77.7 million at the end of the third quarter. On the second spot was Pelham Capital which amassed $46.6 million worth of shares. Marcho Partners, Samlyn Capital, and MIC Capital Partners 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 MIC Capital Partners allocated the biggest weight to Cazoo Group Ltd (NYSE:CZOO), around 3.69% of its 13F portfolio. Pelham Capital is also relatively very bullish on the stock, designating 2.58 percent of its 13F equity portfolio to CZOO.
Now, key money managers were breaking ground themselves. D1 Capital Partners, managed by Daniel Sundheim, assembled the largest position in Cazoo Group Ltd (NYSE:CZOO). D1 Capital Partners had $77.7 million invested in the company at the end of the quarter. Ross Turner’s Pelham Capital also initiated a $46.6 million position during the quarter. The other funds with brand new CZOO positions are Carl Anderson’s Marcho Partners, Robert Pohly’s Samlyn Capital, and Mubadala Investment’s MIC Capital Partners.
Let’s now take a look at hedge fund activity in other stocks similar to Cazoo Group Ltd (NYSE:CZOO). These stocks are Louisiana-Pacific Corporation (NYSE:LPX), ZIM Integrated Shipping Services Ltd. (NYSE:ZIM), Duck Creek Technologies, Inc. (NASDAQ:DCT), eXp World Holdings, Inc. (NASDAQ:EXPI), WESCO International, Inc. (NYSE:WCC), Everbridge, Inc. (NASDAQ:EVBG), and Integra Lifesciences Holdings Corp (NASDAQ:IART). All of these stocks’ market caps are similar to CZOO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LPX | 36 | 670576 | -3 |
| ZIM | 22 | 552565 | -3 |
| DCT | 17 | 234874 | -1 |
| EXPI | 22 | 107817 | 4 |
| WCC | 27 | 1174272 | 4 |
| EVBG | 23 | 1307891 | -3 |
| IART | 17 | 82913 | -2 |
| Average | 23.4 | 590130 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $590 million. That figure was $312 million in CZOO’s case. Louisiana-Pacific Corporation (NYSE:LPX) is the most popular stock in this table. On the other hand Duck Creek Technologies, Inc. (NASDAQ:DCT) is the least popular one with only 17 bullish hedge fund positions. Cazoo Group Ltd (NYSE:CZOO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for CZOO is 73.2. 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately CZOO wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CZOO were disappointed as the stock returned 4.2% since the end of September (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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.