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 867 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30th holdings, data that is available nowhere else. Should you consider Carvana Co. (NYSE:CVNA) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is CVNA a good stock to buy? Hedge funds were selling. The number of bullish hedge fund positions fell 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). There were 63 hedge funds in our database with CVNA positions at the end of the second quarter.
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. With all of this in mind let’s analyze the latest hedge fund action encompassing Carvana Co. (NYSE:CVNA).
Clifford Sosin of CAS Investment Partners
Do Hedge Funds Think CVNA Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 58 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards CVNA over the last 25 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
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, dishing out 34.58 percent of its 13F equity portfolio to CVNA.
Because Carvana Co. (NYSE:CVNA) has faced bearish sentiment from hedge fund managers, it’s easy to see that there is a sect of hedgies who sold off their entire stakes in the third quarter. It’s worth mentioning that Scott Ferguson’s Sachem Head Capital cut the largest stake of all the hedgies tracked by Insider Monkey, worth an estimated $108.7 million in call options. Christian Leone’s fund, Luxor Capital Group, also dropped its call options, about $75.5 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 5 funds in the third quarter.
Let’s check out hedge fund activity in other stocks similar to Carvana Co. (NYSE:CVNA). 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). All of these stocks’ market caps match CVNA’s market cap.
| 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 28.6% in 2021 through November 30th and still beat the market by 5.6 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 -7% since the end of the third quarter (through 11/30) 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 most 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.
