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Hedge Funds Are Selling Just Eat Takeaway.com N.V. (GRUB)

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Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Just Eat Takeaway.com N.V. (NASDAQ:GRUB).

Is Just Eat Takeaway.com N.V. (NASDAQ:GRUB) worth your attention right now? Investors who are in the know were selling. The number of long hedge fund positions dropped by 3 lately. Just Eat Takeaway.com N.V. (NASDAQ:GRUB) was in 35 hedge funds' portfolios at the end of March. 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 Q1 rankings). There were 38 hedge funds in our database with GRUB positions at the end of the fourth quarter.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Gavin Saitowitz of Prelude Capital
Gavin Saitowitz of Prelude Capital

Gavin Saitowitz of Prelude Capital

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 battery 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. Now let's review the fresh hedge fund action regarding Just Eat Takeaway.com N.V. (NASDAQ:GRUB).

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

At the end of March, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the fourth quarter of 2020. By comparison, 32 hedge funds held shares or bullish call options in GRUB a year ago. With hedgies' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

The largest stake in Just Eat Takeaway.com N.V. (NASDAQ:GRUB) was held by Pentwater Capital Management, which reported holding $206.7 million worth of stock at the end of December. It was followed by D E Shaw with a $159.6 million position. Other investors bullish on the company included Carlson Capital, Millennium Management, and Tudor Investment Corp. 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 6.43% of its 13F portfolio. Marathon Partners is also relatively very bullish on the stock, setting aside 5.07 percent of its 13F equity portfolio to GRUB.

Judging by the fact that Just Eat Takeaway.com N.V. (NASDAQ:GRUB) has faced falling interest from the entirety of the hedge funds we track, it's safe to say that there were a few money managers that slashed their full holdings heading into Q2. It's worth mentioning that Parvinder Thiara's Athanor Capital said goodbye to the largest position of the 750 funds watched by Insider Monkey, totaling close to $28.4 million in stock, and Michael Kharitonov and Jon David McAuliffe's Voleon Capital was right behind this move, as the fund dumped about $12.3 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 3 funds heading into Q2.

Let's now take a look at hedge fund activity in other stocks similar to Just Eat Takeaway.com N.V. (NASDAQ:GRUB). We will take a look at Air Lease Corp (NYSE:AL), Omnicell, Inc. (NASDAQ:OMCL), South State Corporation (NASDAQ:SSB), Valley National Bancorp (NASDAQ:VLY), Q2 Holdings Inc (NYSE:QTWO), Alliance Data Systems Corporation (NYSE:ADS), and Alteryx, Inc. (NYSE:AYX). This group of stocks' market valuations match GRUB's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AL,27,917435,3 OMCL,19,73328,-1 SSB,24,252240,7 VLY,17,87726,0 QTWO,26,248123,3 ADS,36,1420743,4 AYX,35,749927,-7 Average,26.3,535646,1.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.3 hedge funds with bullish positions and the average amount invested in these stocks was $536 million. That figure was $1076 million in GRUB's case. Alliance Data Systems Corporation (NYSE:ADS) is the most popular stock in this table. On the other hand Valley National Bancorp (NASDAQ:VLY) is the least popular one with only 17 bullish hedge fund positions. Just Eat Takeaway.com N.V. (NASDAQ: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 69.6. 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 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately GRUB wasn't nearly as popular as these 5 stocks and hedge funds that were betting on GRUB were disappointed as the stock returned -4.5% since the end of March (through 6/25) 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.