A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30th, so let’s proceed with the discussion of the hedge fund sentiment on Chegg Inc (NYSE:CHGG).
Is Chegg Inc a buy, sell, or hold? Hedge funds are becoming less confident. The number of long hedge fund bets were cut by 4 recently. At the end of this article, we will also compare CHGG to other stocks including Diamond Hill Investment Group, Inc. (NASDAQ:DHIL), Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH), and Dime Community Bancshares, Inc. (NASDAQ:DCOM) to get a better sense of its popularity.
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At the moment there are a lot of gauges stock traders employ to appraise their stock investments. Some of the less utilized gauges are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the elite money managers can outclass the market by a very impressive margin (see the details here).
Keeping this in mind, let’s take a look at the new action encompassing Chegg Inc (NYSE:CHGG).
What have hedge funds been doing with Chegg Inc (NYSE:CHGG)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, PAR Capital Management, managed by Paul Reeder and Edward Shapiro, holds the most valuable position in Chegg Inc (NYSE:CHGG). PAR Capital Management has a $57.7 million position in the stock, comprising 1.2% of its 13F portfolio. Coming in second is Act II Capital, managed by Dennis Leibowitz, which holds a $6.2 million position; 3.2% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish comprise Daniel Benton’s Andor Capital Management, Jim Simons’s Renaissance Technologies and Mark N. Diker’s Diker Management.
Judging by the fact that Chegg Inc (NYSE:CHGG) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there is a sect of fund managers who sold off their full holdings last quarter. Interestingly, Chuck Royce’s Royce & Associates sold off the biggest stake of the 700 funds watched by Insider Monkey, worth an estimated $1.6 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital was right behind this move, as the fund dumped about $0.8 million worth. These transactions are interesting, as total hedge fund interest fell by 4 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Chegg Inc (NYSE:CHGG). We will take a look at Diamond Hill Investment Group, Inc. (NASDAQ:DHIL), , Dime Community Bancshares, Inc. (NASDAQ:DCOM), and SJW Corp. (NYSE:SJW). This group of stocks’ market caps resemble CHGG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DHIL | 5 | 75358 | -2 |
| SPWH | 15 | 29738 | 7 |
| DCOM | 15 | 28838 | 4 |
| SJW | 6 | 27730 | -3 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $40 million.That figure was $86 million in CHGG’s case. Sportsman’s Warehouse Holdings Inc (NASDAQ:SPWH) is the most popular stock in this table and the least popular one is Diamond Hill Investment Group, Inc. (NASDAQ:DHIL). In comparison, Chegg Inc (NYSE:CHGG) is not the least nor the most popular among these stocks, but it still attracts attention from investors. Although, this may imply it is a good stock to buy, we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SPWH might be a better candidate to consider a long position.