In this article we will check out the progression of hedge fund sentiment towards Driven Brands Holdings Inc. (NASDAQ:DRVN) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Driven Brands Holdings Inc. (NASDAQ:DRVN) a first-rate investment today? The smart money was taking a bullish view. The number of long hedge fund positions advanced by 5 recently. Driven Brands Holdings Inc. (NASDAQ:DRVN) was in 24 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that DRVN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 19 hedge funds in our database with DRVN positions at the end of the second quarter.
Matthew Drapkin of Becker Drapkin 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 gander at the recent hedge fund action surrounding Driven Brands Holdings Inc. (NASDAQ:DRVN).
Do Hedge Funds Think DRVN Is A Good Stock To Buy Now?
At the end of September, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 26% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards DRVN over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Millennium Management was the largest shareholder of Driven Brands Holdings Inc. (NASDAQ:DRVN), with a stake worth $55 million reported as of the end of September. Trailing Millennium Management was Highside Global Management, which amassed a stake valued at $19.2 million. Point72 Asset Management, Becker Drapkin Management, and Woodson 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 Highside Global Management allocated the biggest weight to Driven Brands Holdings Inc. (NASDAQ:DRVN), around 7.76% of its 13F portfolio. Becker Drapkin Management is also relatively very bullish on the stock, setting aside 4.41 percent of its 13F equity portfolio to DRVN.
As industrywide interest jumped, key money managers were leading the bulls’ herd. Highside Global Management, managed by Zach Petrone, established the most outsized position in Driven Brands Holdings Inc. (NASDAQ:DRVN). Highside Global Management had $19.2 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners also made a $6.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Elise Di Vincenzo Crumbine’s Stormborn Capital Management, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Driven Brands Holdings Inc. (NASDAQ:DRVN) but similarly valued. These stocks are Vimeo Inc. (NASDAQ:VMEO), Diversey Holdings, Ltd. (NASDAQ:DSEY), The Wendy’s Company (NASDAQ:WEN), C3.ai, Inc. (NYSE:AI), Sterling Bancorp (NYSE:STL), The Chemours Company (NYSE:CC), and National Fuel Gas Company (NYSE:NFG). All of these stocks’ market caps resemble DRVN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VMEO | 36 | 465295 | -12 |
| DSEY | 8 | 140678 | -4 |
| WEN | 33 | 949810 | 3 |
| AI | 24 | 199056 | -5 |
| STL | 17 | 252247 | 1 |
| CC | 38 | 548945 | 14 |
| NFG | 19 | 152900 | 7 |
| Average | 25 | 386990 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $387 million. That figure was $184 million in DRVN’s case. The Chemours Company (NYSE:CC) is the most popular stock in this table. On the other hand Diversey Holdings, Ltd. (NASDAQ:DSEY) is the least popular one with only 8 bullish hedge fund positions. Driven Brands Holdings Inc. (NASDAQ:DRVN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DRVN is 66.7. 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. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. A small number of hedge funds were also right about betting on DRVN as the stock returned 12.5% since the end of the third quarter (through 12/9) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
