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Should You Be Tempted To ‘Sell’ Purple Innovation (PRPL) Stock?

·Lesedauer: 3 Min.

Baron Discovery Fund recently published its second-quarter commentary – a copy of which can be downloaded here. During the second quarter of 2021, the Baron Discovery Fund returned 6.07% (institutional shares). In comparison, the benchmark S&P 500 Index was up 8.55%, while the Russell 2000 Growth Index was up 3.92%. You should check out Baron Discovery Fund’s top 5 stock picks for investors to buy right now, which could be the biggest winners of 2021.

In the Q2 2021 Investor Letter, the fund highlighted a few stocks and Purple Innovation Inc. (NASDAQ:PRPL) is one of them. Purple Innovation Inc. (NASDAQ:PRPL) designs and manufactures mattresses, pillows, and cushions. In the last three months, Purple Innovation Inc. (NASDAQ:PRPL) stock lost 17%. Here is what the fund said:

"We sold our position in Purple Innovation, Inc. after the company lowered guidance when an employee lost her life in an industrial accident at the Grantsville, Utah mattress manufacturing plant. The company is completing an internal investigation but, in the meantime, has slowed production to implement better safety measures. While we think the company eventually will be able to work through any required changes in manufacturing processes to increase safety, we felt there was enough uncertainty to exit the position until we had more information on what happened and how future safety incidents could be addressed."

bed, bedclothes, bedding, bedroom, bedside, blanket, clean, comfort, condominium, contemporary, couch, cozy, cushion, design, domestic, dream, elegance, furniture, headboard, home, hotel, lamp, lifestyle, living, luxury, modern, morning, night, nobody, pattern, pillow, relax, residential, rest, retro, romantic, room, satin, sheet, sleep, striped, suite, sweet, vintage, wake, warming, wood
bed, bedclothes, bedding, bedroom, bedside, blanket, clean, comfort, condominium, contemporary, couch, cozy, cushion, design, domestic, dream, elegance, furniture, headboard, home, hotel, lamp, lifestyle, living, luxury, modern, morning, night, nobody, pattern, pillow, relax, residential, rest, retro, romantic, room, satin, sheet, sleep, striped, suite, sweet, vintage, wake, warming, wood

Copyright: worldwidestock / 123RF Stock Photo

In December 2020, we shared Baron Discovery Fund PRPL’s thesis in this article.

In Q1 2021, the number of bullish hedge fund positions on Purple Innovation Inc. (NASDAQ:PRPL) stock decreased by about 27% from the previous quarter (see the chart here), so a number of other hedge fund managers don't believe in PRPL's growth potential. Our calculations showed that Purple Innovation Inc. (NASDAQ:PRPL) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 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. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage.

Disclosure: None. This article is originally published at Insider Monkey.

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