“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Lyft, Inc. (NASDAQ:LYFT) in order to identify whether reputable and successful top money managers continue to believe in its potential. Amon g the ETFs SoFi Gig Economy ETF (NASDAQ:GIGE) currently has the most exposure to Lyft shares.
Lyft, Inc. (NASDAQ:LYFT) has seen a decrease in hedge fund sentiment of late. Our calculations also showed that LYFT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most stock holders, hedge funds are assumed to be worthless, outdated investment tools of yesteryear. While there are more than 8000 funds with their doors open at present, Our experts look at the crème de la crème of this club, around 750 funds. Most estimates calculate that this group of people direct the lion’s share of the smart money’s total capital, and by watching their first-class picks, Insider Monkey has brought to light a few investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Glen Kacher of Light Street Capital
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a glance at the key hedge fund action regarding Lyft, Inc. (NASDAQ:LYFT).
Hedge fund activity in Lyft, Inc. (NASDAQ:LYFT)
Heading into the fourth quarter of 2019, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options 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 $334 million worth of stock at the end of September. It was followed by Glade Brook Capital Partners with a $116.6 million position. Other investors bullish on the company included Light Street Capital, Senator Investment Group, and Alkeon Capital 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 32.92% of its portfolio. Light Street Capital is also relatively very bullish on the stock, earmarking 6.8 percent of its 13F equity portfolio to LYFT.
Judging by the fact that Lyft, Inc. (NASDAQ:LYFT) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few hedgies who were dropping their positions entirely last quarter. It’s worth mentioning that Richard Gerson and Navroz D. Udwadia’s Falcon Edge Capital sold off the largest stake of all the hedgies monitored by Insider Monkey, valued at an estimated $508.6 million in stock. David E. Shaw’s fund, D E Shaw, also cut its stock, about $101.3 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 4 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Lyft, Inc. (NASDAQ:LYFT) but similarly valued. These stocks are DENTSPLY SIRONA Inc. (NASDAQ:XRAY), BanColombia S.A. (NYSE:CIB), Roku, Inc. (NASDAQ:ROKU), and J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT). All of these stocks’ market caps match LYFT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XRAY | 28 | 1628924 | -1 |
| CIB | 11 | 166123 | 1 |
| ROKU | 37 | 322495 | 4 |
| JBHT | 22 | 347136 | 2 |
| Average | 24.5 | 616170 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $616 million. That figure was $881 million in LYFT’s case. Roku, Inc. (NASDAQ:ROKU) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 11 bullish hedge fund positions. Lyft, Inc. (NASDAQ:LYFT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on LYFT as the stock returned 19.9% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
