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In this article we are going to use hedge fund sentiment as a tool and determine whether Just Eat Takeaway.com N.V. (NASDAQ:GRUB) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Just Eat Takeaway.com N.V. (NASDAQ:GRUB) has experienced a decrease in hedge fund sentiment recently. Just Eat Takeaway.com N.V. (NASDAQ:GRUB) was in 24 hedge funds' portfolios at the end of June. The all time high for this statistic is 52. Our calculations also showed that GRUB isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Paul Tudor Jones of Tudor Investment Corp
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, 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. Keeping this in mind we're going to check out the recent hedge fund action encompassing Just Eat Takeaway.com N.V. (NASDAQ:GRUB).
Do Hedge Funds Think GRUB Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -31% from the previous quarter. By comparison, 52 hedge funds held shares or bullish call options 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.
The largest stake in Just Eat Takeaway.com N.V. (NASDAQ:GRUB) was held by D E Shaw, which reported holding $143.2 million worth of stock at the end of June. It was followed by Tudor Investment Corp with a $82.7 million position. Other investors bullish on the company included Tiger Global Management LLC, TIG Advisors, and Magnetar Capital. In terms of the portfolio weights assigned to each position Brightlight Capital allocated the biggest weight to Just Eat Takeaway.com N.V. (NASDAQ:GRUB), around 5.68% of its 13F portfolio. Marathon Partners is also relatively very bullish on the stock, designating 5.65 percent of its 13F equity portfolio to GRUB.
Seeing as Just Eat Takeaway.com N.V. (NASDAQ:GRUB) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there is a sect of money managers who were dropping their positions entirely last quarter. It's worth mentioning that Matthew Halbower's Pentwater Capital Management cut the largest stake of the 750 funds tracked by Insider Monkey, valued at close to $206.7 million in stock. D. E. Shaw's fund, D E Shaw, also dumped its stock, about $159.6 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 11 funds last quarter.
Let's go over hedge fund activity in other stocks similar to Just Eat Takeaway.com N.V. (NASDAQ:GRUB). These stocks are Mid America Apartment Communities Inc (NYSE:MAA), Coupa Software Incorporated (NASDAQ:COUP), KB Financial Group, Inc. (NYSE:KB), Bio-Rad Laboratories, Inc. (NYSE:BIO), Live Nation Entertainment, Inc. (NYSE:LYV), Darden Restaurants, Inc. (NYSE:DRI), and Smith & Nephew plc (NYSE:SNN). All of these stocks' market caps are closest to GRUB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MAA,14,79867,-11 COUP,54,4697937,4 KB,8,26390,-1 BIO,41,1292583,-3 LYV,40,881860,3 DRI,44,890301,-5 SNN,13,119901,2 Average,30.6,1141263,-1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.6 hedge funds with bullish positions and the average amount invested in these stocks was $1141 million. That figure was $610 million in GRUB's case. Coupa Software Incorporated (NASDAQ:COUP) is the most popular stock in this table. On the other hand KB Financial Group, Inc. (NYSE:KB) is the least popular one with only 8 bullish hedge fund positions. Just Eat Takeaway.com N.V. (NASDAQ:GRUB) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for GRUB is 25.2. 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 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately GRUB wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); GRUB investors were disappointed as the stock returned -13.8% since the end of June (through 10/22) 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.
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Disclosure: None. This article was originally published at Insider Monkey.