Here’s Why You Should Invest in Bed Bath and Beyond (BBBY)

Heartland Advisors, an investment company, has published its “Heartland Value Fund” letter to investors for the third quarter of 2021 – a copy of which is available here. The bubble that inflated across many asset classes early in the quarter drained value stocks and the fund lost modestly but kept pace with its benchmark. We believe the setback is temporary and in the long run your stocks should be in a stronger position than many of today’s market favorites. You can take a look at the fund’s top 5 holdings to get an idea of ​​their best recommendations for 2021.

Heartland Advisors mentioned Bed Bath & Beyond Inc. (NASDAQ: BBBY) and discussed his stance on the company. Bed Bath & Beyond Inc. is a retail company based in Union, New Jersey with a market capitalization of $ 1.4 billion. BBBY returned -18.92% year-to-date, while 12-month returns are down -43.22%. The stock closed at $ 14.29 per share on October 21, 2021.

Here’s what Heartland Advisors had to say about Bed Bath & Beyond Inc. in its Q3 2021 investor letter:

“After investors had spent most of the past year betting on consumer resilience, investors began to lose confidence as improved unemployment benefits and government economic controls eased, and inflation remained high. A closer look at the data, as shown in the graph below, suggests that the downturn in consumer economic health may be overstated, and shows that financial obligations such as rent and loan payments as a percentage of disposable income are at their lowest level since have shrunk over 40 years.

More money in the pockets of consumers could benefit portfolio management Bed Bath & Beyond Inc. (BBBY), a national household goods retailer.

We highlighted Bed Bath in our comment last quarter and praised the new management team, led by CEO Mark Tritton, who joined the company after a successful tenure at Target. Management has closed underperforming stores, sold non-core stores to solidify the bottom line, and implemented retail best practices across the company.

Efforts caught a snag in the final quarter due to supply chain disruptions, a surge in COVID-19 cases, and ongoing inflationary pressures. Headwinds weighed on earnings as the company reported weaker than expected results and subdued forecasts in late September.

The recent setback was disappointing; However, we consider the initial reaction from investors to be exaggerated. The challenges encountered during the period are likely to be temporary and we remain confident that Bed Bath will evolve in the future. With the stocks trading at less than 5x EBITDA, BBBY could offer investors meaningful compensation for their patience in the quarters to come. “

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Based on our calculations, Bed Bath & Beyond Inc. (NASDAQ: BBBY) couldn’t make it onto our list of the 30 most popular stocks among hedge funds. BBBY was in 21 Hedge fund portfolios at the end of the first half of 2021 compared to 23 Average in the previous quarter. Bed Bath & Beyond Inc. (NASDAQ: BBBY) achieved a return of -49.86% in the last 3 months.

The reputation of hedge funds as shrewd investors has been tarnished over the past decade as their hedged returns have not kept up with the unsecured returns of market indices. Our research has shown that hedge fund small-cap stock selection beat the market by double digits annually between 1999 and 2016, but the outperformance margin has been decreasing in recent years. Nevertheless, we were able to identify a selected group of hedge fund holdings in advance that exceeded the S&P 500 ETFs by 115 percentage points since March 2017 (details see here). We were also able to identify in advance a select group of hedge fund holdings that lagged the market by 10 percentage points annually between 2006 and 2017. Interestingly, the underperformance margin of these stocks has increased in recent years. Investors who took long positions in the market and sold these stocks short would have returned more than 27% annually between 2015 and 2017. We’ve been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

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Disclosure: None. This article was originally published on Insider Monkey.

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