In this article we will take a look at whether hedge funds think Peloton Interactive, Inc. (NASDAQ:PTON) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Peloton Interactive, Inc. (NASDAQ:PTON) has experienced an increase in support from the world’s most elite money managers in recent months. Peloton Interactive, Inc. (NASDAQ:PTON) was in 67 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 64. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 64 hedge funds in our database with PTON holdings at the end of March. Our calculations also showed that PTON isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Philippe Laffont of Coatue Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s review the new hedge fund action surrounding Peloton Interactive, Inc. (NASDAQ:PTON).
Do Hedge Funds Think PTON Is A Good Stock To Buy Now?
At Q2’s end, a total of 67 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards PTON over the last 24 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Among these funds, Tiger Global Management LLC held the most valuable stake in Peloton Interactive, Inc. (NASDAQ:PTON), which was worth $1094.6 million at the end of the second quarter. On the second spot was Altimeter Capital Management which amassed $644.9 million worth of shares. Coatue Management, D1 Capital Partners, 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 Anatole Investment Management allocated the biggest weight to Peloton Interactive, Inc. (NASDAQ:PTON), around 23.01% of its 13F portfolio. Woodson Capital Management is also relatively very bullish on the stock, designating 16.63 percent of its 13F equity portfolio to PTON.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Peloton Interactive, Inc. (NASDAQ:PTON) headfirst. Anatole Investment Management, managed by George Yang, established the biggest position in Peloton Interactive, Inc. (NASDAQ:PTON). Anatole Investment Management had $231 million invested in the company at the end of the quarter. Aaron Cowen’s Suvretta Capital Management also made a $91 million investment in the stock during the quarter. The other funds with brand new PTON positions are Dan Loeb’s Third Point, Andreas Halvorsen’s Viking Global, and Seth Rosen’s Nitorum Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Peloton Interactive, Inc. (NASDAQ:PTON) but similarly valued. These stocks are The Trade Desk, Inc. (NASDAQ:TTD), Motorola Solutions Inc (NYSE:MSI), Barrick Gold Corporation (NYSE:GOLD), Cognizant Technology Solutions Corp (NASDAQ:CTSH), AFLAC Incorporated (NYSE:AFL), HP Inc. (NYSE:HPQ), and Palo Alto Networks Inc (NYSE:PANW). This group of stocks’ market valuations are closest to PTON’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TTD | 25 | 719961 | -10 |
| MSI | 37 | 1468893 | 8 |
| GOLD | 47 | 1234897 | -2 |
| CTSH | 41 | 2996454 | 8 |
| AFL | 33 | 268048 | -3 |
| HPQ | 39 | 1276740 | -4 |
| PANW | 69 | 4720641 | 5 |
| Average | 41.6 | 1812233 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.6 hedge funds with bullish positions and the average amount invested in these stocks was $1812 million. That figure was $6124 million in PTON’s case. Palo Alto Networks Inc (NYSE:PANW) is the most popular stock in this table. On the other hand The Trade Desk, Inc. (NASDAQ:TTD) is the least popular one with only 25 bullish hedge fund positions. Peloton Interactive, Inc. (NASDAQ:PTON) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PTON is 85.7. 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 25.7% in 2021 through September 27th and beat the market again by 6.2 percentage points. Unfortunately PTON wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PTON were disappointed as the stock returned -25.8% since the end of June (through 9/27) 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.
