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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 GrubHub Inc (NYSE:GRUB).
Is GRUB stock a buy or sell? GrubHub Inc (NYSE:GRUB) was in 38 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 52. GRUB shareholders have witnessed a decrease in hedge fund interest recently. There were 49 hedge funds in our database with GRUB holdings at the end of September. Our calculations also showed that GRUB isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Matthew Halbower of Pentwater Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. With all of this in mind let's go over the fresh hedge fund action surrounding GrubHub Inc (NYSE:GRUB).
Do Hedge Funds Think GRUB Is A Good Stock To Buy Now?
At the end of December, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from the third quarter of 2020. On the other hand, there were a total of 33 hedge funds with a bullish position in GRUB a year ago. With hedge funds' capital changing hands, there exists a few notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Pentwater Capital Management, managed by Matthew Halbower, holds the largest position in GrubHub Inc (NYSE:GRUB). Pentwater Capital Management has a $296 million position in the stock, comprising 3.6% of its 13F portfolio. The second most bullish fund manager is D E Shaw, managed by D. E. Shaw, which holds a $232.9 million position; 0.2% of its 13F portfolio is allocated to the company. Some other peers that hold long positions consist of Steven Clark's Omni Partners, Carl Tiedemann and Michael Tiedemann's TIG Advisors and Clint Carlson's Carlson Capital. In terms of the portfolio weights assigned to each position Omni Partners allocated the biggest weight to GrubHub Inc (NYSE:GRUB), around 8.42% of its 13F portfolio. TIG Advisors is also relatively very bullish on the stock, designating 7.16 percent of its 13F equity portfolio to GRUB.
Since GrubHub Inc (NYSE:GRUB) has witnessed bearish sentiment from the smart money, we can see that there was a specific group of funds that elected to cut their entire stakes in the fourth quarter. Interestingly, Simon Sadler's Segantii Capital cut the largest stake of all the hedgies monitored by Insider Monkey, worth about $38.7 million in stock. Noam Gottesman's fund, GLG Partners, also cut its stock, about $33.8 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 11 funds in the fourth quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as GrubHub Inc (NYSE:GRUB) but similarly valued. We will take a look at Fiverr International Ltd. (NYSE:FVRR), iRhythm Technologies, Inc. (NASDAQ:IRTC), Q2 Holdings Inc (NYSE:QTWO), Twist Bioscience Corporation (NASDAQ:TWST), Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), Ares Management Corp (NYSE:ARES), and United Therapeutics Corporation (NASDAQ:UTHR). This group of stocks' market caps are similar to GRUB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FVRR,29,528731,-1 IRTC,19,295586,-7 QTWO,23,307892,-4 TWST,23,1390852,2 IOVA,41,2471521,1 ARES,20,412055,4 UTHR,36,1979060,5 Average,27.3,1055100,0 [/table]
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 $1055 million. That figure was $1609 million in GRUB's case. Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is the most popular stock in this table. On the other hand iRhythm Technologies, Inc. (NASDAQ:IRTC) is the least popular one with only 19 bullish hedge fund positions. GrubHub Inc (NYSE:GRUB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GRUB is 59.1. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and beat the market again by 0.8 percentage points. Unfortunately GRUB wasn't nearly as popular as these 30 stocks and hedge funds that were betting on GRUB were disappointed as the stock returned -16.1% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 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.