Did Hedge Funds Catch A Break With SBA Communications Corporation (SBAC)?

Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards SBA Communications Corporation (NASDAQ:SBAC) at the end of the third quarter and determine whether the smart money was really smart about this stock.

SBA Communications Corporation (NASDAQ:SBAC) was in 36 hedge funds’ portfolios at the end of September. The all time high for this statistic is 57. SBAC has seen a decrease in hedge fund interest of late. There were 43 hedge funds in our database with SBAC holdings at the end of June. Our calculations also showed that SBAC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind let’s take a peek at the latest hedge fund action regarding SBA Communications Corporation (NASDAQ:SBAC).

Charles Akre of Akre Capital Management

Do Hedge Funds Think SBAC Is A Good Stock To Buy Now?

At third quarter’s end, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SBAC over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Charles Akre’s Akre Capital Management has the most valuable position in SBA Communications Corporation (NASDAQ:SBAC), worth close to $638.1 million, accounting for 3.9% of its total 13F portfolio. The second most bullish fund manager is Ken Griffin of Citadel Investment Group, with a $213.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that are bullish contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, D. E. Shaw’s D E Shaw and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Zeno Research allocated the biggest weight to SBA Communications Corporation (NASDAQ:SBAC), around 9.13% of its 13F portfolio. Land & Buildings Investment Management is also relatively very bullish on the stock, setting aside 4.97 percent of its 13F equity portfolio to SBAC.

Due to the fact that SBA Communications Corporation (NASDAQ:SBAC) has faced bearish sentiment from hedge fund managers, it’s easy to see that there is a sect of funds who were dropping their positions entirely in the third quarter. At the top of the heap, Matthew Stadelman’s Diamond Hill Capital dumped the largest position of the “upper crust” of funds watched by Insider Monkey, totaling close to $154.5 million in stock, and John Khoury’s Long Pond Capital was right behind this move, as the fund dumped about $34.3 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 7 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as SBA Communications Corporation (NASDAQ:SBAC) but similarly valued. We will take a look at Yum! Brands, Inc. (NYSE:YUM), Cloudflare, Inc. (NYSE:NET), Mizuho Financial Group Inc. (NYSE:MFG), Robinhood Markets Inc. (NASDAQ:HOOD), Parker-Hannifin Corporation (NYSE:PH), AutoZone, Inc. (NYSE:AZO), and Unity Software Inc. (NYSE:U). This group of stocks’ market values are closest to SBAC’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $2473 million. That figure was $1894 million in SBAC’s case. Cloudflare, Inc. (NYSE:NET) is the most popular stock in this table. On the other hand Mizuho Financial Group Inc. (NYSE:MFG) is the least popular one with only 6 bullish hedge fund positions. SBA Communications Corporation (NASDAQ:SBAC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SBAC is 51. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, SBAC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SBAC were disappointed as the stock returned -1.4% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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