The coronavirus has created both near-term and long-term paradigm shifts for business and the economy. To reflect these evolving consumer and corporate dynamics, Jim Cramer created the Covid-19 index: a dynamic list of 100 companies that are best situated to adapt or gain during this changing landscape.
13F filings were recently released for the first quarter of 2020, and we wanted to see if hedge funds and institutions agreed with Cramer. Using analysis from 13F-tracking website WhaleWisdom, here’s a breakdown of hedge fund and institutional activity in the top 10 stocks in Cramer’s Covid-19 index:
The exercise-from-home company selling $2,300 stationary bikes with $40/month subscriptions has been a direct beneficiary of state-sanctioned gym closures. I suspect the coronavirus impact for Peloton (PTON) - Get Report represents a transient bump rather than a permanent change in how people exercise; however institutions and hedge funds alike substantially increased their total holdings.
Everbridge (EVBG) - Get Report is an SaaS company that provides automated software applications for companies that allows them to respond to critical events or emergencies. Though it’s somewhat low profile, it serves 8 of the 10 largest U.S. cities and 9 of the 10 largest investment banks. Hedge funds do not appear to share the same feelings of optimism as holdings were essentially unchanged.
This popular symbol is entirely a play on a Covid vaccine, which is a far-fetched bet as this would be their first go-to-market vaccination. Moderna (MRNA) - Get Report swings wildly based on headlines, and feels more suited to day trading than real investment. Hedge funds and institutions, however, noticeably increased their holdings.
4. Livongo Health
Livongo Health (LVGO) - Get Report is a healthcare company that helps people with chronic conditions such as diabetes, hypertension and obesity. A lot of these issues are common co-morbidities with Covid fatalities. It had a strong showing across both institutions and hedge funds.
Dexcom (DXCM) - Get Report is a glucose-monitoring system for diabetics. This is another comorbidity management play. While Dexcom didn’t see much purchasing activity for hedge funds, it is a somewhat popular position with nearly 10% of funds holding the name.
6. Beyond Meat
Beyond Meat (BYND) - Get Report is on this list since it was well-situated to gain market share when it was reported there were Covid outbreaks at meatpacking plants. Beyond Meat wisely lowered their prices as meat costs rose, expanding their footprint. I’m not sure how much sense this one makes from a Covid lens, but hedge funds certainly became much more bullish on the name.
7. Coupa Software
Coupa Software (COUP) - Get Report is a financial spending management tool that is a great angle on a growing WFH trend and the practical tools these new offices need. It saw a tepid increase, but is a strong overall position with hedge funds with over 7.5% of them having a position.
8. The Trade Desk
The Trade Desk (TTD) - Get Report is an internet advertising company that presumably benefits because people are forced to stay at home and thus are online more. Makes sense, but this is one of those short-term plays where it’s difficult to see it being a long-term Covid beneficiary, unless you genuinely think people aren’t going to go out as much anymore. It saw modest increases in overall holdings.
MarketAxess (MKTX) - Get Report is an electronic bond trading platform, so this is something of a home office investment. The digitization of the bond market is a disruptive concept with or without Covid. It saw a solid increase among hedge funds.
The financial technology company has had a remarkable year and is becoming the dominant player for digital payments as people stay indoors and shop online rather than use their cards in person. PayPal (PYPL) - Get Report was doing great before the pandemic, and is a strong long-term holding. While it saw slight declines in portfolios, it’s a hedge fund favorite with a whopping 23.4% of funds having a position.