The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 873 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 June 30th. In this article we look at what those investors think of 2U Inc (NASDAQ:TWOU).
Is 2U Inc (NASDAQ:TWOU) ready to rally soon? Money managers were taking an optimistic view. The number of bullish hedge fund bets rose by 2 lately. 2U Inc (NASDAQ:TWOU) was in 25 hedge funds’ portfolios at the end of June. The all time high for this statistic is 25. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that TWOU isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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John Overdeck of Two Sigma Advisors
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Do Hedge Funds Think TWOU Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from one quarter earlier. On the other hand, there were a total of 24 hedge funds with a bullish position in TWOU a year ago. 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 $391 million reported as of the end of June. Trailing ARK Investment Management was Greenvale Capital, which amassed a stake valued at $143.8 million. Two Sigma Advisors, 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 15.86% of its 13F portfolio. Tenzing Global Investors is also relatively very bullish on the stock, setting aside 5.29 percent of its 13F equity portfolio to TWOU.
Now, specific money managers have jumped into 2U Inc (NASDAQ:TWOU) headfirst. LMR Partners, managed by Ben Levine, Andrew Manuel and Stefan Renold, created the most outsized position in 2U Inc (NASDAQ:TWOU). LMR Partners had $14.2 million invested in the company at the end of the quarter. Ken Grossman and Glen Schneider’s SG Capital Management also made a $8.2 million investment in the stock during the quarter. The following funds were also among the new TWOU investors: Brian Ashford-Russell and Tim Woolley’s Polar Capital, Michael Gelband’s ExodusPoint Capital, and Ray Dalio’s Bridgewater Associates.
Let’s also examine hedge fund activity in other stocks similar to 2U Inc (NASDAQ:TWOU). These stocks are Phreesia, Inc. (NYSE:PHR), Pebblebrook Hotel Trust (NYSE:PEB), Livent Corporation (NYSE:LTHM), American Equity Investment Life Holding Company (NYSE:AEL), Burning Rock Biotech Limited (NASDAQ:BNR), National Health Investors Inc (NYSE:NHI), and CarGurus, Inc. (NASDAQ:CARG). This group of stocks’ market caps are similar to TWOU’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PHR | 26 | 226853 | -1 |
| PEB | 17 | 57810 | 7 |
| LTHM | 27 | 251159 | 5 |
| AEL | 20 | 187474 | -4 |
| BNR | 9 | 81726 | -2 |
| NHI | 13 | 45554 | 2 |
| CARG | 23 | 241921 | -6 |
| Average | 19.3 | 156071 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.3 hedge funds with bullish positions and the average amount invested in these stocks was $156 million. That figure was $758 million in TWOU’s case. Livent Corporation (NYSE:LTHM) is the most popular stock in this table. On the other hand Burning Rock Biotech Limited (NASDAQ:BNR) is the least popular one with only 9 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 81.4. 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 24% in 2021 through October 22nd and beat the market again by 1.6 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 -24% since the end of June (through 10/22) 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.
Follow 2U Inc. (NASDAQ:TWOU)
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Disclosure: None. This article was originally published at Insider Monkey.
