At Insider Monkey, we pore over the filings of nearly 867 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30th. In this article, we will use that wealth of knowledge to determine whether or not Toast Inc. (NYSE:TOST) makes for a good investment right now.
Is Toast Inc. (NYSE:TOST) a healthy stock for your portfolio? Investors who are in the know were buying. The number of bullish hedge fund positions advanced by 38 recently. Toast Inc. (NYSE:TOST) was in 38 hedge funds’ portfolios at the end of September. Our calculations also showed that TOST 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 we’re going to take a gander at the new hedge fund action surrounding Toast Inc. (NYSE:TOST).
David Blood of Generation Investment Management
Do Hedge Funds Think TOST Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38 from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in TOST 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, Echo Street Capital Management was the largest shareholder of Toast Inc. (NYSE:TOST), with a stake worth $82.3 million reported as of the end of September. Trailing Echo Street Capital Management was Tiger Global Management LLC, which amassed a stake valued at $62.4 million. Alta Park Capital, Generation Investment Management, and Citadel Investment Group 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 Cowbird Capital allocated the biggest weight to Toast Inc. (NYSE:TOST), around 6.6% of its 13F portfolio. Alta Park Capital is also relatively very bullish on the stock, dishing out 4.42 percent of its 13F equity portfolio to TOST.
As one would reasonably expect, specific money managers were breaking ground themselves. Echo Street Capital Management, managed by Greg Poole, assembled the most valuable position in Toast Inc. (NYSE:TOST). Echo Street Capital Management had $82.3 million invested in the company at the end of the quarter. Chase Coleman’s Tiger Global Management LLC also made a $62.4 million investment in the stock during the quarter. The other funds with brand new TOST positions are Bijan Modanlou, Joseph Bou-Saba, and Jayaveera Kodali’s Alta Park Capital, David Blood and Al Gore’s Generation Investment Management, and Ken Griffin’s Citadel Investment Group.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Toast Inc. (NYSE:TOST) but similarly valued. These stocks are CDW Corporation (NASDAQ:CDW), Avantor, Inc. (NYSE:AVTR), Ryanair Holdings plc (NASDAQ:RYAAY), Franco-Nevada Corporation (NYSE:FNV), AmerisourceBergen Corporation (NYSE:ABC), Cheniere Energy, Inc. (NYSE:LNG), and Horizon Therapeutics Public Limited Company (NASDAQ:HZNP). This group of stocks’ market values match TOST’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CDW | 37 | 1906004 | 10 |
| AVTR | 53 | 2439815 | 9 |
| RYAAY | 15 | 411390 | 0 |
| FNV | 26 | 951083 | 3 |
| ABC | 44 | 1214780 | 1 |
| LNG | 49 | 3103167 | 0 |
| HZNP | 60 | 4573780 | 4 |
| Average | 40.6 | 2085717 | 3.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 40.6 hedge funds with bullish positions and the average amount invested in these stocks was $2086 million. That figure was $567 million in TOST’s case. Horizon Therapeutics Public Limited Company (NASDAQ:HZNP) is the most popular stock in this table. On the other hand Ryanair Holdings plc (NASDAQ:RYAAY) is the least popular one with only 15 bullish hedge fund positions. Toast Inc. (NYSE:TOST) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TOST is 50.9. 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 negative signal and 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately TOST wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); TOST investors were disappointed as the stock returned -19.9% since the end of September (through 11/30) 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 in 2021.
Follow Toast Inc. (NYSE:TOST)
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Disclosure: None. This article was originally published at Insider Monkey.
