We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. We at Insider Monkey have gone over 835 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of GrubHub Inc (NYSE:GRUB) based on that data.
GrubHub Inc (NYSE:GRUB) has experienced an increase in hedge fund interest recently. Our calculations also showed that GRUB isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
In today’s marketplace there are many gauges stock market investors have at their disposal to grade their stock investments. A duo of the most innovative gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite investment managers can outperform the broader indices by a solid margin (see the details here).
Eashwar Krishnan of Tybourne Capital Management
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a peek at the new hedge fund action regarding GrubHub Inc (NYSE:GRUB).
How are hedge funds trading GrubHub Inc (NYSE:GRUB)?
At the end of the fourth quarter, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 32% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in GRUB a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Pelham Capital was the largest shareholder of GrubHub Inc (NYSE:GRUB), with a stake worth $103.9 million reported as of the end of September. Trailing Pelham Capital was Lansdowne Partners, which amassed a stake valued at $73.7 million. Tybourne Capital Management, Marathon Partners, and VGI Partners 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 Marathon Partners allocated the biggest weight to GrubHub Inc (NYSE:GRUB), around 19.86% of its 13F portfolio. Pelham Capital is also relatively very bullish on the stock, setting aside 11.5 percent of its 13F equity portfolio to GRUB.
Now, specific money managers have jumped into GrubHub Inc (NYSE:GRUB) headfirst. Tybourne Capital Management, managed by Eashwar Krishnan, established the most outsized position in GrubHub Inc (NYSE:GRUB). Tybourne Capital Management had $65.4 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also initiated a $32.5 million position during the quarter. The other funds with brand new GRUB positions are Noam Gottesman’s GLG Partners, Guy Shahar’s DSAM Partners, and Vadim Rubinchik’s Brightlight Capital.
Let’s go over hedge fund activity in other stocks similar to GrubHub Inc (NYSE:GRUB). These stocks are VEON Ltd. (NASDAQ:VEON), Cyberark Software Ltd (NASDAQ:CYBR), Lancaster Colony Corporation (NASDAQ:LANC), and ACI Worldwide Inc (NASDAQ:ACIW). This group of stocks’ market valuations are similar to GRUB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VEON | 11 | 65909 | 0 |
| CYBR | 20 | 210449 | -1 |
| LANC | 16 | 203540 | -10 |
| ACIW | 20 | 330169 | -1 |
| Average | 16.75 | 202517 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $203 million. That figure was $528 million in GRUB’s case. Cyberark Software Ltd (NASDAQ:CYBR) is the most popular stock in this table. On the other hand VEON Ltd. (NASDAQ:VEON) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks GrubHub Inc (NYSE:GRUB) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th and still beat the market by 5.5 percentage points. Unfortunately GRUB wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GRUB were disappointed as the stock returned -26.5% during the first two and a half months of 2020 (through March 25th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
