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 823 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, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded GrubHub Inc (NYSE:GRUB) and determine whether the smart money was really smart about this stock.
GrubHub Inc (NYSE:GRUB) investors should be aware of an increase in hedge fund sentiment of late. GrubHub Inc (NYSE:GRUB) was in 52 hedge funds’ portfolios at the end of June. This is the new all time high for this statistics. Our calculations also showed that GRUB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Glen Kacher of Light Street Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind let’s take a glance at the recent hedge fund action regarding GrubHub Inc (NYSE:GRUB).
What does smart money think about GrubHub Inc (NYSE:GRUB)?
Heading into the third quarter of 2020, a total of 52 of the hedge funds tracked by Insider Monkey were long this stock, a change of 63% from the previous quarter. On the other hand, there were a total of 32 hedge funds with a bullish position in GRUB a year ago. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the biggest position in GrubHub Inc (NYSE:GRUB). D E Shaw has a $128.8 million position in the stock, comprising 0.2% of its 13F portfolio. On D E Shaw’s heels is Carlson Capital, managed by Clint Carlson, which holds a $117.4 million position; the fund has 3.2% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism comprise Ross Turner’s Pelham Capital, Brian Ashford-Russell and Tim Woolley’s Polar Capital and Alec Litowitz and Ross Laser’s Magnetar Capital. In terms of the portfolio weights assigned to each position Pelham Capital allocated the biggest weight to GrubHub Inc (NYSE:GRUB), around 11.16% of its 13F portfolio. Marathon Partners is also relatively very bullish on the stock, earmarking 9.18 percent of its 13F equity portfolio to GRUB.
Now, some big names have jumped into GrubHub Inc (NYSE:GRUB) headfirst. Carlson Capital, managed by Clint Carlson, created the biggest position in GrubHub Inc (NYSE:GRUB). Carlson Capital had $117.4 million invested in the company at the end of the quarter. Ross Turner’s Pelham Capital also initiated a $106.9 million position during the quarter. The other funds with new positions in the stock are Brian Ashford-Russell and Tim Woolley’s Polar Capital, Glen Kacher’s Light Street Capital, and Carl Tiedemann and Michael Tiedemann’s TIG Advisors.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as GrubHub Inc (NYSE:GRUB) but similarly valued. We will take a look at Federal Realty Investment Trust (NYSE:FRT), Plains All American Pipeline, L.P. (NYSE:PAA), Amedisys Inc (NASDAQ:AMED), Penumbra Inc (NYSE:PEN), Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI), United Microelectronics Corp (NYSE:UMC), and Cree, Inc. (NASDAQ:CREE). This group of stocks’ market caps are closest to GRUB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FRT | 20 | 76045 | -4 |
| PAA | 9 | 65144 | 1 |
| AMED | 30 | 375114 | 10 |
| PEN | 20 | 263196 | 0 |
| OLLI | 24 | 179330 | 5 |
| UMC | 11 | 110335 | -4 |
| CREE | 17 | 597780 | 1 |
| Average | 18.7 | 238135 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.7 hedge funds with bullish positions and the average amount invested in these stocks was $238 million. That figure was $1080 million in GRUB’s case. Amedisys Inc (NASDAQ:AMED) is the most popular stock in this table. On the other hand Plains All American Pipeline, L.P. (NYSE:PAA) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks GrubHub Inc (NYSE:GRUB) is more popular among hedge funds. Our overall hedge fund sentiment score for GRUB is 90. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Unfortunately GRUB wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on GRUB were disappointed as the stock returned 2.9% since the end of the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Grubhub Inc. (NYSE:GRUB)
Follow Grubhub Inc. (NYSE:GRUB)
Disclosure: None. This article was originally published at Insider Monkey.
