Several hedge funds have done some bottom-fishing amid the market meltdown — but so far this buying is not working out too well.
Some hedge funds’ purchases have triggered certain regulatory filings because they either established large new positions or added to already significant holdings.
It looks like many of these purchases were premature. Most of these stocks are way down from the filing date of the most recent transactions.
One prime example is Gabriel Plotkin’s Melvin Capital Management. It disclosed in a regulatory filing that it made a big bet on travel agency Expedia amid the market selloff.
According to a 13G filing dated March 4, Melvin bought more than 6.8 million shares of Expedia, or 5.1 percent of the total outstanding shares. The purchase instantly made the stock Melvin’s largest single U.S. common equity position, according to its most recent filings.
Melvin’s regulatory filing did not disclose when exactly it bought the shares or what price it paid for them. Unlike with 13D filings, which are used when investors are taking activist positions, investors who file 13G forms meant for passive holdings are not required to disclose their positions within ten business days after crossing the 5 percent ownership threshold level. However, the hedge fund did say in its filing that a little less than one-third of the stake represents call options to buy common stock.
Shares of Expedia have more than halved since their February 14 peak. They are also down 45 percent since March 4.
Several other high-profile hedge funds made sizable additions to already large positions. For example, Darsana Capital Partners disclosed on March 9 that it bought more than 1.7 million shares of Spirit Aerosystems Holdings as of February 27, boosting its stake in the maker of large commercial aircraft structures by 38 percent, according to a 13G filing.
The stock remained the hedge fund’s second-largest U.S. long position, according to regulatory filings. The share price, though, has nearly halved since the filing date.
Lone Pine Capital disclosed that as of March 3 it owned more than 3.8 million shares of Carvana. This is nearly quadruple the number of shares it previously disclosed owning as of year-end.
Shares of the used car dealer have more than halved since March 3, dropping more than 22 percent on Monday alone. The stock had roughly doubled in a little over a year, until it peaked in late February.
Activist JANA Partners, meanwhile, boosted its stake in restaurant operator Bloomin’ Brands by 24 percent, according to an amended 13D filing.
It sold and bought shares in the final week of February. Since late February, it bought all of the recent shares as the stock tumbled, from $19.42 to $9.65, according to the filing. On Monday alone, the stock plunged more than 30 percent, to close at $7.49.
In early February, JANA said it planned to nominate as many as three directors, including Scott Ostfeld, a JANA partner and portfolio manager, to the board of Bloomin’ Brands, which operates Outback Steakhouse and other chains.
