Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Planet Fitness Inc (NYSE:PLNT).
Is PLNT a good stock to buy? Planet Fitness Inc (NYSE:PLNT) was in 34 hedge funds’ portfolios at the end of June. The all time high for this statistic is 47. PLNT shareholders have witnessed a decrease in enthusiasm from smart money of late. There were 40 hedge funds in our database with PLNT holdings at the end of March. Our calculations also showed that PLNT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech 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. Now let’s take a glance at the recent hedge fund action regarding Planet Fitness Inc (NYSE:PLNT).
Do Hedge Funds Think PLNT Is A Good Stock To Buy Now?
At the end of June, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in PLNT over the last 24 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
The largest stake in Planet Fitness Inc (NYSE:PLNT) was held by SRS Investment Management, which reported holding $530.4 million worth of stock at the end of June. It was followed by Steadfast Capital Management with a $124.2 million position. Other investors bullish on the company included Broad Bay Capital, Rima Senvest Management, and Bares Capital Management. In terms of the portfolio weights assigned to each position Broad Bay Capital allocated the biggest weight to Planet Fitness Inc (NYSE:PLNT), around 11.2% of its 13F portfolio. Yost Capital Management is also relatively very bullish on the stock, dishing out 9.41 percent of its 13F equity portfolio to PLNT.
Because Planet Fitness Inc (NYSE:PLNT) has witnessed falling interest from the smart money, it’s easy to see that there is a sect of hedgies that elected to cut their entire stakes last quarter. It’s worth mentioning that Gavin Baker’s Atreides Management dumped the biggest stake of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $40.3 million in stock, and Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors was right behind this move, as the fund sold off about $12.3 million worth. These moves are interesting, as total hedge fund interest was cut by 6 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Planet Fitness Inc (NYSE:PLNT). These stocks are Twist Bioscience Corporation (NASDAQ:TWST), Performance Food Group Company (NYSE:PFGC), MSA Safety Incorporated (NYSE:MSA), Coherent, Inc. (NASDAQ:COHR), Manpowergroup Inc (NYSE:MAN), MicroStrategy Incorporated (NASDAQ:MSTR), and United States Steel Corporation (NYSE:X). This group of stocks’ market valuations resemble PLNT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TWST | 23 | 1156581 | -1 |
| PFGC | 41 | 734340 | 23 |
| MSA | 13 | 34128 | -4 |
| COHR | 43 | 1525189 | 2 |
| MAN | 27 | 343953 | 1 |
| MSTR | 16 | 91795 | -4 |
| X | 39 | 688525 | 17 |
| Average | 28.9 | 653502 | 4.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.9 hedge funds with bullish positions and the average amount invested in these stocks was $654 million. That figure was $1175 million in PLNT’s case. Coherent, Inc. (NASDAQ:COHR) is the most popular stock in this table. On the other hand MSA Safety Incorporated (NYSE:MSA) is the least popular one with only 13 bullish hedge fund positions. Planet Fitness Inc (NYSE:PLNT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for PLNT is 55.7. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Hedge funds were also right about betting on PLNT as the stock returned 5.8% since the end of Q2 (through 10/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
