Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards DoorDash, Inc. (NYSE:DASH).
Is DoorDash (DASH) a good stock to buy now? The smart money was buying. The number of long hedge fund bets improved by 38 lately. DoorDash, Inc. (NYSE:DASH) was in 38 hedge funds’ portfolios at the end of December. Our calculations also showed that DASH isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Chase Coleman of Tiger Global
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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. With all of this in mind we’re going to review the latest hedge fund action surrounding DoorDash, Inc. (NYSE:DASH).
Do Hedge Funds Think DASH Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38 from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in DASH a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Coatue Management held the most valuable stake in DoorDash, Inc. (NYSE:DASH), which was worth $1249.2 million at the end of the fourth quarter. On the second spot was Darsana Capital Partners which amassed $666.9 million worth of shares. SCGE Management, Lone Pine Capital, and Tiger Global Management LLC 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 Darsana Capital Partners allocated the biggest weight to DoorDash, Inc. (NYSE:DASH), around 18.82% of its 13F portfolio. SCGE Management is also relatively very bullish on the stock, dishing out 7.11 percent of its 13F equity portfolio to DASH.
As aggregate interest increased, key hedge funds were breaking ground themselves. Coatue Management, managed by Philippe Laffont, initiated the most valuable position in DoorDash, Inc. (NYSE:DASH). Coatue Management had $1.2492 billion invested in the company at the end of the quarter. Anand Desai’s Darsana Capital Partners also made a $666.9 million investment in the stock during the quarter. The following funds were also among the new DASH investors: Christopher Lyle’s SCGE Management, Lone Pine Capital, and Chase Coleman’s Tiger Global Management LLC.
Let’s go over hedge fund activity in other stocks similar to DoorDash, Inc. (NYSE:DASH). We will take a look at Capital One Financial Corp. (NYSE:COF), Roper Technologies Inc. (NYSE:ROP), Keurig Dr Pepper Inc. (NASDAQ:KDP), The Blackstone Group Inc. (NYSE:BX), NXP Semiconductors NV (NASDAQ:NXPI), Peloton Interactive, Inc. (NASDAQ:PTON), and Vodafone Group Plc (NASDAQ:VOD). This group of stocks’ market caps are similar to DASH’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position COF,56,3028457,14 ROP,40,1348849,-10 KDP,29,1076705,-12 BX,54,1450344,5 NXPI,66,2259680,-2 PTON,63,5666462,5 VOD,17,745457,-5 Average,46.4,2225136,-0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 46.4 hedge funds with bullish positions and the average amount invested in these stocks was $2225 million. That figure was $3952 million in DASH’s case. NXP Semiconductors NV (NASDAQ:NXPI) is the most popular stock in this table. On the other hand Vodafone Group Plc (NASDAQ:VOD) is the least popular one with only 17 bullish hedge fund positions. DoorDash, Inc. (NYSE:DASH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for DASH is 44.3. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and surpassed the market again by 0.8 percentage points. Unfortunately DASH wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); DASH investors were disappointed as the stock returned -5.4% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.