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Why Barnes & Noble Education (BNED) Stock is a Compelling Investment Case

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Greenhaven Road Capital recently released its Q3 2020 Investor Letter, a copy of which you can download here. Greenhaven’s estimated returns for the third quarter totaled approximately +50% net of fees and expenses. August was the best month in the partnership history. The net result is that both funds are up around 55% for the year, comparing favorably to the Russell 2000, which ended September down -8.7% year to date. You should check out Greenhaven Road Capital's top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.

In the said letter, Greenhaven Road Capital highlighted a few stocks and Barnes & Noble Education Inc. (NYSE:BNED) is one of them. Barnes & Noble Education Inc. (NYSE:BNED) is a bookselling company. Year-to-date, Barnes & Noble Education Inc. (NYSE:BNED) stock lost 45.9% and on November 4th it had a closing price of $2.31. Here is what Greenhaven Road Capital said:

"Distinct from the consumer book purveyor business trading under BKS, Barnes & Noble Education (BNED) is in the unenviable position of operating college bookstores when many colleges are partly or fully remote. The company’s balance sheet also could give one pause. The opportunity (if there is one) lies in the fact that the balance sheet reflects leases which are generally renegotiable on very short notice, and thus less onerous than they appear. In addition, there are several digital initiatives, including a study aide product similar to Chegg and products that offer digitized books connected to a school’s learning management system, as well as offerings where books are included in tuition and revenue is shared with the school. Barnes & Noble Education is partnered with colleges to run more than 1,400 physical, virtual, and custom bookstores – they have an optimal position to reach millions of students. We purchased our shares at an implied market capitalization of roughly $100M. In a world full of companies trading at 20 times sales, BNED is at 1/20th of sales. With a little luck and an eventual return to normal on college campuses, we could do well on this investment."

Pixabay/Public Domain

In Q1 2020, the number of bullish hedge fund positions on Barnes & Noble Education Inc. (NYSE:BNED) stock increased by about 56% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in BNED's growth potential. Our calculations showed that Barnes & Noble Education Inc. (NYSE:BNED) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 185% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 109 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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:

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