You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund managers like Jeff Ubben, George Soros and Seth Klarman hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Is Planet Fitness Inc (NYSE:PLNT) a buy, sell, or hold? Hedge funds are getting more bullish. The number of bullish hedge fund bets went up by 13 recently. Our calculations also showed that PLNT isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are many signals market participants put to use to analyze publicly traded companies. A pair of the most underrated signals are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the best money managers can outclass the market by a solid margin (see the details here).
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's check out the fresh hedge fund action encompassing Planet Fitness Inc (NYSE:PLNT).
Hedge fund activity in Planet Fitness Inc (NYSE:PLNT)
At Q2's end, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 52% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in PLNT over the last 16 quarters. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Among these funds, Millennium Management held the most valuable stake in Planet Fitness Inc (NYSE:PLNT), which was worth $99.6 million at the end of the second quarter. On the second spot was Two Sigma Advisors which amassed $96.3 million worth of shares. Moreover, Pelham Capital, Waratah Capital Advisors, and Junto Capital Management were also bullish on Planet Fitness Inc (NYSE:PLNT), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, key hedge funds have been driving this bullishness. Junto Capital Management, managed by James Parsons, assembled the biggest position in Planet Fitness Inc (NYSE:PLNT). Junto Capital Management had $39.2 million invested in the company at the end of the quarter. Steven Boyd's Armistice Capital also initiated a $19.1 million position during the quarter. The other funds with brand new PLNT positions are David Fiszel's Honeycomb Asset Management, Paul Marshall and Ian Wace's Marshall Wace LLP, and Dmitry Balyasny's Balyasny Asset Management.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Planet Fitness Inc (NYSE:PLNT) but similarly valued. These stocks are Hubbell Incorporated (NYSE:HUBB), Woodward Inc (NASDAQ:WWD), bluebird bio Inc (NASDAQ:BLUE), and First Solar, Inc. (NASDAQ:FSLR). This group of stocks' market valuations resemble PLNT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HUBB,18,345023,-3 WWD,28,353160,8 BLUE,22,155991,-3 FSLR,24,372192,1 Average,23,306592,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $307 million. That figure was $661 million in PLNT's case. Woodward Inc (NASDAQ:WWD) is the most popular stock in this table. On the other hand Hubbell Incorporated (NYSE:HUBB) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Planet Fitness Inc (NYSE:PLNT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately PLNT wasn't nearly as popular as these 20 stocks and hedge funds that were betting on PLNT were disappointed as the stock returned -20.1% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.