Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about CarLotz, Inc. (NASDAQ:LOTZ) in this article.
CarLotz, Inc. (NASDAQ:LOTZ) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 19 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that LOTZ isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as DRDGOLD Ltd. (NYSE:DRD), CleanSpark, Inc. (NASDAQ:CLSK), and Brightcove Inc (NASDAQ:BCOV) to gather more data points.
To the average investor there are many metrics stock market investors can use to evaluate their holdings. A pair of the less known metrics are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can beat their index-focused peers by a healthy amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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. With all of this in mind let’s take a look at the key hedge fund action surrounding CarLotz, Inc. (NASDAQ:LOTZ).
Do Hedge Funds Think LOTZ Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in LOTZ over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in CarLotz, Inc. (NASDAQ:LOTZ) was held by Tremblant Capital, which reported holding $38.9 million worth of stock at the end of December. It was followed by Park West Asset Management with a $19.6 million position. Other investors bullish on the company included Millennium Management, Azora Capital, and Scopus Asset Management. In terms of the portfolio weights assigned to each position Tremblant Capital allocated the biggest weight to CarLotz, Inc. (NASDAQ:LOTZ), around 1.13% of its 13F portfolio. Azora Capital is also relatively very bullish on the stock, designating 1.01 percent of its 13F equity portfolio to LOTZ.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: 999. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Tremblant Capital).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as CarLotz, Inc. (NASDAQ:LOTZ) but similarly valued. These stocks are DRDGOLD Ltd. (NYSE:DRD), CleanSpark, Inc. (NASDAQ:CLSK), Brightcove Inc (NASDAQ:BCOV), ADTRAN, Inc. (NASDAQ:ADTN), Organigram Holdings Inc. (NASDAQ:OGI), Boston Omaha Corporation (NASDAQ:BOMN), and Franks International NV (NYSE:FI). All of these stocks’ market caps match LOTZ’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DRD | 5 | 17080 | 0 |
| CLSK | 8 | 33086 | 3 |
| BCOV | 21 | 292077 | -1 |
| ADTN | 10 | 75318 | -1 |
| OGI | 9 | 15213 | 5 |
| BOMN | 2 | 301026 | -1 |
| FI | 9 | 7836 | 0 |
| Average | 9.1 | 105948 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.1 hedge funds with bullish positions and the average amount invested in these stocks was $106 million. That figure was $106 million in LOTZ’s case. Brightcove Inc (NASDAQ:BCOV) is the most popular stock in this table. On the other hand Boston Omaha Corporation (NASDAQ:BOMN) is the least popular one with only 2 bullish hedge fund positions. CarLotz, Inc. (NASDAQ:LOTZ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LOTZ is 78.2. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately LOTZ wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LOTZ were disappointed as the stock returned -36.9% since the end of March (through 7/16) 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 Carlotz Inc. (NASDAQ:LOTZ)
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Disclosure: None. This article was originally published at Insider Monkey.