Were Hedge Funds Right About Dumping Lyft, Inc. (LYFT)?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Lyft, Inc. (NASDAQ:LYFT).

Is Lyft, Inc. (NASDAQ:LYFT) the right pick for your portfolio? The smart money was reducing their bets on the stock. The number of long hedge fund bets were cut by 17 lately. Lyft, Inc. (NASDAQ:LYFT) was in 43 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 71. Our calculations also showed that LYFT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

At the moment there are several metrics shareholders can use to assess stocks. Some of the best metrics are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can outclass their index-focused peers by a very impressive amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Harold Levy of Iridian Asset Management

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 are checking out stock pitches like this emerging lithium 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. With all of this in mind we’re going to take a peek at the latest hedge fund action surrounding Lyft, Inc. (NASDAQ:LYFT).

Do Hedge Funds Think LYFT Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -28% from the previous quarter. The graph below displays the number of hedge funds with bullish position in LYFT over the last 24 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Alkeon Capital Management, managed by Panayotis Takis Sparaggis, holds the most valuable position in Lyft, Inc. (NASDAQ:LYFT). Alkeon Capital Management has a $286.5 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is Citadel Investment Group, led by Ken Griffin, holding a $239 million call position; 0.1% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism consist of David Cohen and Harold Levy’s Iridian Asset Management, Ben Jacobs’s Anomaly Capital Management and Nicolai Tangen’s Ako Capital. In terms of the portfolio weights assigned to each position Engle Capital allocated the biggest weight to Lyft, Inc. (NASDAQ:LYFT), around 12.4% of its 13F portfolio. Anomaly Capital Management is also relatively very bullish on the stock, dishing out 7.63 percent of its 13F equity portfolio to LYFT.

Since Lyft, Inc. (NASDAQ:LYFT) has faced a decline in interest from hedge fund managers, we can see that there exists a select few fund managers that decided to sell off their full holdings in the second quarter. At the top of the heap, Gavin Baker’s Atreides Management cut the biggest stake of the “upper crust” of funds tracked by Insider Monkey, comprising close to $69.4 million in stock, and Alexander Mitchell’s Scopus Asset Management was right behind this move, as the fund dumped about $67.9 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 17 funds in the second quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Lyft, Inc. (NASDAQ:LYFT) but similarly valued. These stocks are Avangrid, Inc. (NYSE:AGR), Wheaton Precious Metals Corp. (NYSE:WPM), Devon Energy Corporation (NYSE:DVN), Albemarle Corporation (NYSE:ALB), Tradeweb Markets Inc. (NASDAQ:TW), Qualtrics International Inc. (NASDAQ:XM), and Ubiquiti Inc. (NYSE:UI). This group of stocks’ market values resemble LYFT’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $658 million. That figure was $1386 million in LYFT’s case. Devon Energy Corporation (NYSE:DVN) is the most popular stock in this table. On the other hand Avangrid, Inc. (NYSE:AGR) is the least popular one with only 12 bullish hedge fund positions. Lyft, Inc. (NASDAQ:LYFT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for LYFT is 47. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 through November 5th and beat the market again by 3.1 percentage points. Unfortunately LYFT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on LYFT were disappointed as the stock returned -11.5% since the end of June (through 11/5) 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 many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.