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 have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider Bed Bath & Beyond Inc. (NASDAQ:BBBY) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Bed Bath & Beyond Inc. (NASDAQ:BBBY) was in 21 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 34. BBBY shareholders have witnessed a decrease in activity from the world’s largest hedge funds lately. There were 23 hedge funds in our database with BBBY holdings at the end of March. Our calculations also showed that BBBY isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. Keeping this in mind we’re going to check out the new hedge fund action encompassing Bed Bath & Beyond Inc. (NASDAQ:BBBY).
Do Hedge Funds Think BBBY Is A Good Stock To Buy Now?
At the end of June, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the previous quarter. On the other hand, there were a total of 33 hedge funds with a bullish position in BBBY 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 Bed Bath & Beyond Inc. (NASDAQ:BBBY) was held by Contrarius Investment Management, which reported holding $146.2 million worth of stock at the end of June. It was followed by Arrowstreet Capital with a $80.3 million position. Other investors bullish on the company included Citadel Investment Group, D E Shaw, and Citadel Investment Group. 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 7.11% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, dishing out 0.37 percent of its 13F equity portfolio to BBBY.
Due to the fact that Bed Bath & Beyond Inc. (NASDAQ:BBBY) has experienced bearish sentiment from hedge fund managers, we can see that there exists a select few fund managers that decided to sell off their entire stakes by the end of the second quarter. Interestingly, Renaissance Technologies cut the largest investment of the “upper crust” of funds watched by Insider Monkey, valued at about $54.9 million in stock, and Greg Eisner’s Engineers Gate Manager was right behind this move, as the fund sold off about $1.6 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 2 funds by the end of the second quarter.
Let’s now review hedge fund activity in other stocks similar to Bed Bath & Beyond Inc. (NASDAQ:BBBY). We will take a look at Hilton Grand Vacations Inc. (NYSE:HGV), AdaptHealth Corp. (NASDAQ:AHCO), Applied Industrial Technologies Inc (NYSE:AIT), Fabrinet (NYSE:FN), Insight Enterprises, Inc. (NASDAQ:NSIT), Investors Bancorp, Inc. (NASDAQ:ISBC), and Ameris Bancorp (NASDAQ:ABCB). All of these stocks’ market caps match BBBY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HGV | 34 | 973469 | 0 |
| AHCO | 20 | 366938 | 3 |
| AIT | 18 | 57979 | -3 |
| FN | 14 | 125328 | -1 |
| NSIT | 19 | 368371 | 2 |
| ISBC | 15 | 53960 | 3 |
| ABCB | 15 | 89100 | -1 |
| Average | 19.3 | 290735 | 0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.3 hedge funds with bullish positions and the average amount invested in these stocks was $291 million. That figure was $364 million in BBBY’s case. Hilton Grand Vacations Inc. (NYSE:HGV) is the most popular stock in this table. On the other hand Fabrinet (NYSE:FN) is the least popular one with only 14 bullish hedge fund positions. Bed Bath & Beyond Inc. (NASDAQ:BBBY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BBBY is 39. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately BBBY wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BBBY were disappointed as the stock returned -57% since the end of June (through 10/22) 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 many of these stocks already outperformed the market since 2019.
Follow Bed Bath & Beyond Inc (NASDAQ:BBBY)
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Disclosure: None. This article was originally published at Insider Monkey.
