We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Lyft, Inc. (NASDAQ:LYFT).
Lyft, Inc. (NASDAQ:LYFT) investors should pay attention to an increase in hedge fund interest of late. LYFT was in 45 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 35 hedge funds in our database with LYFT positions at the end of the previous quarter. Our calculations also showed that LYFT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Glen Kacher of Light Street Capital
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a peek at the latest hedge fund action surrounding Lyft, Inc. (NASDAQ:LYFT).
How have hedgies been trading Lyft, Inc. (NASDAQ:LYFT)?
At the end of the fourth quarter, a total of 45 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in LYFT 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.
The largest stake in Lyft, Inc. (NASDAQ:LYFT) was held by Citadel Investment Group, which reported holding $162.9 million worth of stock at the end of September. It was followed by Glade Brook Capital Partners with a $122.9 million position. Other investors bullish on the company included Light Street Capital, Suvretta Capital Management, and Scopus Asset Management. In terms of the portfolio weights assigned to each position Glade Brook Capital Partners allocated the biggest weight to Lyft, Inc. (NASDAQ:LYFT), around 38.28% of its 13F portfolio. Meru Capital is also relatively very bullish on the stock, setting aside 25.54 percent of its 13F equity portfolio to LYFT.
As industrywide interest jumped, key money managers have been driving this bullishness. Scopus Asset Management, managed by Alexander Mitchell, assembled the largest position in Lyft, Inc. (NASDAQ:LYFT). Scopus Asset Management had $55.4 million invested in the company at the end of the quarter. C. Ashton Newhall and James Lim’s Greenspring Associates also initiated a $33.7 million position during the quarter. The other funds with brand new LYFT positions are George McCabe’s Portolan Capital Management, Bijan Modanlou, Joseph Bou-Saba, and Jayaveera Kodali’s Alta Park Capital, and Gavin Baker’s Atreides Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Lyft, Inc. (NASDAQ:LYFT) but similarly valued. We will take a look at Icahn Enterprises LP (NASDAQ:IEP), Duke Realty Corporation (NYSE:DRE), Continental Resources, Inc. (NYSE:CLR), and W.R. Berkley Corporation (NYSE:WRB). This group of stocks’ market valuations resemble LYFT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IEP | 4 | 12205892 | -1 |
| DRE | 24 | 183153 | 5 |
| CLR | 38 | 569767 | -1 |
| WRB | 34 | 417937 | 8 |
| Average | 25 | 3344187 | 2.75 |
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 $3344 million. That figure was $984 million in LYFT’s case. Continental Resources, Inc. (NYSE:CLR) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Lyft, Inc. (NASDAQ:LYFT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th and still beat the market by 3.2 percentage points. Unfortunately LYFT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on LYFT were disappointed as the stock returned -55.6% during the first two and a half months of 2020 (through March 16th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
