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Why The RealReal (REAL) Stock is a Compelling Investment Case

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Alex Smith
·3 min read
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Miller Value Partners recently released its Q3 2020 Investor Letter, a copy of which you can download here. The Opportunity Equity Fund posted a return of 13.01% for the quarter (net of fees), outperforming its benchmark, the S&P 500 Index which returned 8.93% in the same quarter. You should check out Miller Value Partners' top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.

In the said letter, Miller Value Partners highlighted a few stocks and The RealReal Inc. (NASDAQ:REAL) is one of them. The RealReal Inc. (NASDAQ:REAL) is an online and brick-and-mortar marketplace for authenticated luxury consignment. Year-to-date, The RealReal Inc. (NASDAQ:REAL) stock lost 30% and on November 2nd it had a closing price of $13.19. Here is what Miller Value Partners said:

"TheRealReal is an online second-hand luxury goods marketplace. It’s unique “reverse logistics” (sourcing goods from many diverse individuals) and authentication process offers a competitive advantage, especially as it continues to scale and achieve network effects of a two-sided marketplace. It hit $30 per share in 2019 after its IPO but traded down and now sits in the mid-teens. Unlike many e-commerce players, the COVID environment pressured the company because of challenges sourcing and authenticating goods. The company built a virtual authentication capability, which should help going forward. We believe the company will benefit from a continued normalization in the market and see significant upside in the stock."

Creative Lab/Shutterstock.com

In Q2 2020, the number of bullish hedge fund positions on The RealReal Inc. (NASDAQ:REAL) stock increased by about 27% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in The RealReal's growth potential. Our calculations showed that The RealReal Inc. (NASDAQ:REAL) 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, 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 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.