Carvana's S&P 500 Jump Delivers Over $500 Million Windfall To Viking And Coatue

Core Insights - Carvana Co (NYSE:CVNA) is set to join the S&P 500, leading to a significant premarket surge and substantial profits for influential hedge fund investors [1][2][6] - The stock has experienced a remarkable turnaround, with shares rising nearly 10% in premarket trading following the announcement of its inclusion in the S&P 500 [2][6] - The inclusion in the index will create structural demand as index-tracking funds are required to purchase shares, further boosting the stock's performance [2][6] Investment Dynamics - Hedge fund managers Andreas Halvorsen of Viking Global and Philippe Laffont of Coatue have significantly increased their stakes in Carvana, with Halvorsen holding approximately 2.1 million shares and Laffont about 2 million shares [4] - Their average purchase prices were in the mid-$260s to high-$270s, which now appear well-timed as the stock closed near $400 [4][5] - Halvorsen's gains are estimated at around $268 million, while Laffont's are approximately $272 million, totaling about $540 million in paper profits [5] Market Context - Eighteen months prior, Carvana faced bankruptcy fears and was considered a casualty of the pandemic, but it has since outperformed major tech companies [6] - The potential for declining interest rates combined with forced index inflows could further amplify the stock's momentum [7]