Is BBBY Stock A Buy or Sell?

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. Insider Monkey finished processing 887 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of December 31st, 2020. In this article we are going to take a look at smart money sentiment towards Bed Bath & Beyond Inc. (NASDAQ:BBBY).

Is BBBY stock a buy? The smart money was getting more bullish. The number of long hedge fund bets improved by 1 lately. Bed Bath & Beyond Inc. (NASDAQ:BBBY) was in 33 hedge funds’ portfolios at the end of December. The all time high for this statistic is 34. Our calculations also showed that BBBY isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Donald Sussman of Paloma Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. With all of this in mind we’re going to view the fresh hedge fund action regarding Bed Bath & Beyond Inc. (NASDAQ:BBBY).

Do Hedge Funds Think BBBY Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the previous quarter. On the other hand, there were a total of 34 hedge funds with a bullish position in BBBY a year ago. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

The largest stake in Bed Bath & Beyond Inc. (NASDAQ:BBBY) was held by D E Shaw, which reported holding $109.1 million worth of stock at the end of December. It was followed by Contrarius Investment Management with a $108.3 million position. Other investors bullish on the company included Arrowstreet Capital, Renaissance Technologies, and Millennium Management. In terms of the portfolio weights assigned to each position Contrarius Investment Management allocated the biggest weight to Bed Bath & Beyond Inc. (NASDAQ:BBBY), around 6.71% of its 13F portfolio. Stamina Capital Management is also relatively very bullish on the stock, earmarking 2.87 percent of its 13F equity portfolio to BBBY.

Consequently, some big names were breaking ground themselves. Renaissance Technologies, established the most valuable position in Bed Bath & Beyond Inc. (NASDAQ:BBBY). Renaissance Technologies had $53.1 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $1.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Mark Kleiman’s Factorial Partners, Greg Poole’s Echo Street Capital Management, and David Harding’s Winton Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Bed Bath & Beyond Inc. (NASDAQ:BBBY) but similarly valued. We will take a look at Seres Therapeutics Inc (NASDAQ:MCRB), Cedar Fair, L.P. (NYSE:FUN), Innospec Inc. (NASDAQ:IOSP), ViaSat, Inc. (NASDAQ:VSAT), Rush Enterprises, Inc. (NASDAQ:RUSHA), Rush Enterprises, Inc. (NASDAQ:RUSHB), and Essential Properties Realty Trust, Inc. (NYSE:EPRT). This group of stocks’ market caps match BBBY’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $248 million. That figure was $535 million in BBBY’s case. ViaSat, Inc. (NASDAQ:VSAT) is the most popular stock in this table. On the other hand Rush Enterprises, Inc. (NASDAQ:RUSHB) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Bed Bath & Beyond Inc. (NASDAQ:BBBY) is more popular among hedge funds. Our overall hedge fund sentiment score for BBBY is 85.1. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 7.9% in 2021 through April 1st but still managed to beat the market by 0.4 percentage points. Hedge funds were also right about betting on BBBY as the stock returned 62.8% since the end of December (through 4/1) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

Disclosure: None. This article was originally published at Insider Monkey.