Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Planet Fitness Inc (NYSE:PLNT).
Planet Fitness Inc (NYSE:PLNT) has experienced a decrease in activity from the world’s largest hedge funds of late. Planet Fitness Inc (NYSE:PLNT) was in 40 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 47. There were 47 hedge funds in our database with PLNT positions at the end of the fourth quarter. Our calculations also showed that PLNT isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 115 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.
Dan Loeb of Third Point
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 battery 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. With all of this in mind we’re going to review the fresh hedge fund action surrounding Planet Fitness Inc (NYSE:PLNT).
Do Hedge Funds Think PLNT Is A Good Stock To Buy Now?
At the end of March, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in PLNT over the last 23 quarters. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Among these funds, SRS Investment Management held the most valuable stake in Planet Fitness Inc (NYSE:PLNT), which was worth $544.8 million at the end of the fourth quarter. On the second spot was Steadfast Capital Management which amassed $157.5 million worth of shares. Broad Bay Capital, Bloom Tree Partners, and Atreides Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Broad Bay Capital allocated the biggest weight to Planet Fitness Inc (NYSE:PLNT), around 11.25% of its 13F portfolio. Deep Field Asset Management is also relatively very bullish on the stock, dishing out 9.64 percent of its 13F equity portfolio to PLNT.
Due to the fact that Planet Fitness Inc (NYSE:PLNT) has experienced a decline in interest from the smart money, we can see that there is a sect of hedge funds who were dropping their positions entirely by the end of the first quarter. At the top of the heap, Dan Loeb’s Third Point dumped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, valued at about $179 million in stock. Ryan Frick and Oliver Evans’s fund, Dorsal Capital Management, also dumped its stock, about $64 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 7 funds by the end of the first quarter.
Let’s go over hedge fund activity in other stocks similar to Planet Fitness Inc (NYSE:PLNT). These stocks are Texas Roadhouse Inc (NASDAQ:TXRH), C3.ai, Inc. (NYSE:AI), First Financial Bankshares Inc (NASDAQ:FFIN), Old Republic International Corporation (NYSE:ORI), Rexford Industrial Realty Inc (NYSE:REXR), Boyd Gaming Corporation (NYSE:BYD), and Shift4 Payments, Inc. (NYSE:FOUR). This group of stocks’ market values match PLNT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TXRH | 22 | 383312 | -6 |
| AI | 27 | 222209 | -10 |
| FFIN | 11 | 31041 | -1 |
| ORI | 24 | 377223 | -3 |
| REXR | 13 | 75514 | -4 |
| BYD | 22 | 299026 | -6 |
| FOUR | 33 | 538716 | -5 |
| Average | 21.7 | 275292 | -5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $275 million. That figure was $1181 million in PLNT’s case. Shift4 Payments, Inc. (NYSE:FOUR) is the most popular stock in this table. On the other hand First Financial Bankshares Inc (NASDAQ:FFIN) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Planet Fitness Inc (NYSE:PLNT) is more popular among hedge funds. Our overall hedge fund sentiment score for PLNT is 73.5. 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 19.3% in 2021 through June 25th and still beat the market by 4.8 percentage points. Unfortunately PLNT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on PLNT were disappointed as the stock returned 1.1% since the end of the first quarter (through 6/25) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
