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 867 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 September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Carvana Co. (NYSE:CVNA) and determine whether the smart money was really smart about this stock.
Is Carvana Co. (NYSE:CVNA) a buy, sell, or hold? The best stock pickers were becoming less confident. The number of long hedge fund positions dropped by 5 recently. Carvana Co. (NYSE:CVNA) was in 58 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 64. Our calculations also showed that CVNA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind let’s take a glance at the fresh hedge fund action regarding Carvana Co. (NYSE:CVNA).
Chase Coleman of Tiger Global
Do Hedge Funds Think CVNA Is A Good Stock To Buy Now?
At the end of September, a total of 58 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in CVNA over the last 25 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
The largest stake in Carvana Co. (NYSE:CVNA) was held by Tiger Global Management LLC, which reported holding $1853.9 million worth of stock at the end of September. It was followed by Spruce House Investment Management with a $1130.8 million position. Other investors bullish on the company included CAS Investment Partners, D1 Capital Partners, and Lone Pine Capital. In terms of the portfolio weights assigned to each position CAS Investment Partners allocated the biggest weight to Carvana Co. (NYSE:CVNA), around 47.5% of its 13F portfolio. Antipodean Advisors is also relatively very bullish on the stock, setting aside 34.58 percent of its 13F equity portfolio to CVNA.
Due to the fact that Carvana Co. (NYSE:CVNA) has experienced a decline in interest from the smart money, it’s easy to see that there were a few funds who were dropping their positions entirely heading into Q4. Intriguingly, Scott Ferguson’s Sachem Head Capital sold off the biggest position of all the hedgies watched by Insider Monkey, totaling close to $108.7 million in call options, and Christian Leone’s Luxor Capital Group was right behind this move, as the fund said goodbye to about $75.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 5 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Carvana Co. (NYSE:CVNA) but similarly valued. These stocks are Gartner Inc (NYSE:IT), United Rentals, Inc. (NYSE:URI), ZTO Express (Cayman) Inc. (NYSE:ZTO), Bilibili Inc. (NASDAQ:BILI), Fortive Corporation (NYSE:FTV), Realty Income Corporation (NYSE:O), and Coca-Cola Europacific Partners plc (NASDAQ:CCEP). This group of stocks’ market values are similar to CVNA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IT | 33 | 2039924 | -6 |
| URI | 37 | 1382415 | -10 |
| ZTO | 20 | 1019859 | -1 |
| BILI | 35 | 1509730 | -12 |
| FTV | 32 | 2130115 | 1 |
| O | 22 | 275031 | -1 |
| CCEP | 32 | 1192664 | 1 |
| Average | 30.1 | 1364248 | -4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.1 hedge funds with bullish positions and the average amount invested in these stocks was $1364 million. That figure was $8309 million in CVNA’s case. United Rentals, Inc. (NYSE:URI) is the most popular stock in this table. On the other hand ZTO Express (Cayman) Inc. (NYSE:ZTO) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Carvana Co. (NYSE:CVNA) is more popular among hedge funds. Our overall hedge fund sentiment score for CVNA is 77.2. 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. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, CVNA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on CVNA were disappointed as the stock returned -46.3% since the end of the third quarter (through 1/31) 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 all of these stocks already outperformed the market since 2019.
Follow Carvana Co. (NYSE:CVNA)
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Disclosure: None. This article was originally published at Insider Monkey.
