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Is Leslie’s, Inc. (LESL) A Good Stock To Buy?

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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 867 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of September 30th, 2021. In this article we are going to take a look at smart money sentiment towards Leslie's, Inc. (NASDAQ:LESL).

Is LESL a good stock to buy now? The best stock pickers were reducing their bets on the stock. The number of bullish hedge fund bets retreated by 4 in recent months. Leslie's, Inc. (NASDAQ:LESL) was in 31 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 35. Our calculations also showed that LESL 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. With all of this in mind we're going to take a look at the recent hedge fund action regarding Leslie's, Inc. (NASDAQ:LESL).


Dan Loeb of Third Point

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

Heading into the fourth quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in LESL a year ago. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

More specifically, Third Point was the largest shareholder of Leslie's, Inc. (NASDAQ:LESL), with a stake worth $126.3 million reported as of the end of September. Trailing Third Point was Marshall Wace LLP, which amassed a stake valued at $35.7 million. Millennium Management, Woodson Capital Management, and Tremblant Capital 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 Becker Drapkin Management allocated the biggest weight to Leslie's, Inc. (NASDAQ:LESL), around 2.15% of its 13F portfolio. Woodson Capital Management is also relatively very bullish on the stock, designating 1.98 percent of its 13F equity portfolio to LESL.

Because Leslie's, Inc. (NASDAQ:LESL) has experienced bearish sentiment from hedge fund managers, it's easy to see that there was a specific group of hedgies who were dropping their positions entirely by the end of the third quarter. It's worth mentioning that Jeffrey Talpins's Element Capital Management dropped the largest position of the 750 funds followed by Insider Monkey, valued at close to $11.5 million in stock. Simon Sadler's fund, Segantii Capital, also dumped its stock, about $9.2 million worth. These moves are important to note, as total hedge fund interest fell by 4 funds by the end of the third quarter.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Leslie's, Inc. (NASDAQ:LESL) but similarly valued. We will take a look at SiTime Corporation (NASDAQ:SITM), BankUnited Inc (NYSE:BKU), Datto Holding Corp. (NYSE:MSP), Recursion Pharmaceuticals Inc. (NASDAQ:RXRX), Schrodinger, Inc. (NASDAQ:SDGR), Artisan Partners Asset Management Inc (NYSE:APAM), and Home Bancshares, Inc. (Conway, AR) (NYSE:HOMB). This group of stocks' market values resemble LESL's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SITM,21,246921,4 BKU,17,97881,4 MSP,11,2894934,-1 RXRX,13,299050,-2 SDGR,20,666585,0 APAM,15,210633,-4 HOMB,16,75347,-2 Average,16.1,641622,-0.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $642 million. That figure was $343 million in LESL's case. SiTime Corporation (NASDAQ:SITM) is the most popular stock in this table. On the other hand Datto Holding Corp. (NYSE:MSP) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Leslie's, Inc. (NASDAQ:LESL) is more popular among hedge funds. Our overall hedge fund sentiment score for LESL is 77.6. 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. 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 still beat the market by 5.6 percentage points. Unfortunately LESL wasn't nearly as popular as these 5 stocks and hedge funds that were betting on LESL were disappointed as the stock returned 2% since the end of the third quarter (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 since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.