Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards The Beauty Health Company (NASDAQ:SKIN) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is The Beauty Health Company (NASDAQ:SKIN) a bargain? Investors who are in the know were turning bullish. The number of bullish hedge fund positions went up by 39 recently. The Beauty Health Company (NASDAQ:SKIN) was in 39 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that SKIN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
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. Keeping this in mind let’s take a glance at the latest hedge fund action encompassing The Beauty Health Company (NASDAQ:SKIN).
Richard Driehaus of Driehaus Capital
Do Hedge Funds Think SKIN Is A Good Stock To Buy Now?
At Q3’s end, a total of 39 of the hedge funds tracked by Insider Monkey were long this stock, a change of 39 from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SKIN over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Redmile Group, managed by Jeremy Green, holds the largest position in The Beauty Health Company (NASDAQ:SKIN) . Redmile Group has a $194.4 million position in the stock, comprising 3.4% of its 13F portfolio. Coming in second is Paul Marshall and Ian Wace of Marshall Wace LLP, with a $106.8 million position; 0.4% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish contain Christian Leone’s Luxor Capital Group, Richard Driehaus’s Driehaus Capital and Michael Rockefeller and KarláKroeker’s Woodline Partners. In terms of the portfolio weights assigned to each position One01 Capital allocated the biggest weight to The Beauty Health Company (NASDAQ:SKIN) , around 7.51% of its 13F portfolio. Tri Locum Partners is also relatively very bullish on the stock, designating 5.21 percent of its 13F equity portfolio to SKIN.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most outsized position in The Beauty Health Company (NASDAQ:SKIN) . Marshall Wace LLP had $106.8 million invested in the company at the end of the quarter. Roberto Mignone’s Bridger Management also initiated a $19.5 million position during the quarter. The other funds with new positions in the stock are James Woodson Davis’s Woodson Capital Management, Dennis Goldstein’s Rip Road Capital, and Prashanth Jayaram’s Tri Locum Partners.
Let’s now take a look at hedge fund activity in other stocks similar to The Beauty Health Company (NASDAQ:SKIN) . We will take a look at Parsons Corporation (NYSE:PSN), PotlatchDeltic Corporation (NASDAQ:PCH), Copa Holdings, S.A. (NYSE:CPA), CommVault Systems, Inc. (NASDAQ:CVLT), 3D Systems Corporation (NYSE:DDD), Acushnet Holdings Corp. (NYSE:GOLF), and Arconic Corporation (NYSE:ARNC). All of these stocks’ market caps resemble SKIN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PSN | 8 | 30497 | -1 |
| PCH | 22 | 85997 | -6 |
| CPA | 16 | 229501 | 2 |
| CVLT | 19 | 588850 | -9 |
| DDD | 18 | 284758 | -2 |
| GOLF | 20 | 64313 | -1 |
| ARNC | 26 | 763617 | -4 |
| Average | 18.4 | 292505 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.4 hedge funds with bullish positions and the average amount invested in these stocks was $293 million. That figure was $865 million in SKIN’s case. Arconic Corporation (NYSE:ARNC) is the most popular stock in this table. On the other hand Parsons Corporation (NYSE:PSN) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks The Beauty Health Company (NASDAQ:SKIN) is more popular among hedge funds. Our overall hedge fund sentiment score for SKIN is 90. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, SKIN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SKIN were disappointed as the stock returned -45.3% since the end of the third quarter (through 1/31) 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 all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
