The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at GrubHub Inc (NYSE:GRUB) from the perspective of those elite funds.
GrubHub Inc (NYSE:GRUB) has experienced a decrease in activity from the world’s largest hedge funds in recent months. At the end of this article we will also compare GRUB to other stocks, including La Quinta Holdings Inc (NYSE:LQ), BGC Partners, Inc. (NASDAQ:BGCP), and Gold Fields Limited (ADR) (NYSE:GFI) to get a better sense of its popularity.
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In the eyes of most stock holders, hedge funds are seen as underperforming, old investment tools of yesteryear. While there are more than an 8000 funds in operation at present, Our experts hone in on the top tier of this group, about 700 funds. It is estimated that this group of investors command the lion’s share of the hedge fund industry’s total asset base, and by observing their highest performing investments, Insider Monkey has found a number of investment strategies that have historically exceeded Mr. Market. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Keeping this in mind, we’re going to analyze the fresh action regarding GrubHub Inc (NYSE:GRUB).
What have hedge funds been doing with GrubHub Inc (NYSE:GRUB)?
At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a slump of 23% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Luxor Capital Group, managed by Christian Leone, holds the most valuable position in GrubHub Inc (NYSE:GRUB), worth some $205.4 million and comprising 4.7% of its 13F portfolio. Coming in second is Joho Capital, managed by Robert Karr, which holds a $76.6 million position; 21.9% of its 13F portfolio is allocated to the company. Some other professional money managers that are bullish comprise Josh Resnick’s Jericho Capital Asset Management, Vivek Mehta and Aaron Husock’s ShearLink Capital and Roberto Mignone’s Bridger Management.
Since GrubHub Inc (NYSE:GRUB) has witnessed a declination in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedgies who were dropping their full holdings last quarter. Interestingly, Robert Pohly’s Samlyn Capital sold off the largest position of all the hedgies tracked by Insider Monkey, comprising close to $44.4 million in call options. Daniel S. Och’s fund, OZ Management, also said goodbye to its call options, about $27 million worth of. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 7 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to GrubHub Inc (NYSE:GRUB). These stocks are La Quinta Holdings Inc (NYSE:LQ), BGC Partners, Inc. (NASDAQ:BGCP), Gold Fields Limited (ADR) (NYSE:GFI), and Littelfuse, Inc. (NASDAQ:LFUS). All of these 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 |
|---|---|---|---|
| LQ | 24 | 318895 | -5 |
| BGCP | 18 | 128405 | 2 |
| GFI | 16 | 165266 | 0 |
| LFUS | 13 | 136706 | -7 |
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $187 million. That figure was a whooping $467 million in GRUB’s case. La Quinta Holdings Inc (NYSE:LQ) is the most popular stock in this table, while Littelfuse, Inc. (NASDAQ:LFUS) is the least popular one with only 13 bullish hedge fund positions. GrubHub Inc (NYSE:GRUB) is on par with the leader but has attracted a lot more of the hedgies’ money. Taking it all into consideration, we believe further research into both LQ and GRUB is necessary to find out which stock has greater upside potential.
