Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Is Aerohive Networks Inc (NYSE:HIVE) the right pick for your portfolio? Money managers are surely in an optimistic mood. The number of long hedge fund positions that are disclosed in regulatory 13F filings improved by 1 lately. There were 9 hedge funds in our database with HIVE holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Bank of Marin Bancorp (NASDAQ:BMRC), Plug Power Inc (NASDAQ:PLUG), and Roadrunner Transportation Systems Inc (NYSE:RRTS) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
cherezoff / shutterstock.com
Now, we’re going to go over the new action encompassing Aerohive Networks Inc (NYSE:HIVE).
What does the smart money think about Aerohive Networks Inc (NYSE:HIVE)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in HIVE over the last 5 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Amish Mehta of SQN Investors holds the biggest position in Aerohive Networks Inc (NYSE:HIVE) which has a $18.6 million position in the stock, comprising 9.6% of its 13F portfolio. Coming in second is Renaissance Technologies, one of the largest hedge funds in the world, which holds a $6.2 million position. Some other peers that are bullish consist of D E Shaw, Israel Englander’s Millennium Management and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that SQN Investors is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As aggregate interest increased, specific money managers were breaking ground themselves. Glenn Russell Dubinof Highbridge Capital Management established the largest position in Aerohive Networks Inc (NYSE:HIVE). Highbridge Capital Management had $0.1 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also initiated a $0.1 million position during the quarter.
Let’s also examine hedge fund activity in other stocks similar to Aerohive Networks Inc (NYSE:HIVE). These stocks are Bank of Marin Bancorp (NASDAQ:BMRC), Plug Power Inc (NASDAQ:PLUG), Roadrunner Transportation Systems Inc (NYSE:RRTS), and Model N Inc (NYSE:MODN). This group of stocks’ market caps are closest to HIVE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BMRC | 5 | 23383 | -1 |
| PLUG | 2 | 721 | 1 |
| RRTS | 16 | 35487 | -3 |
| MODN | 13 | 104702 | 0 |
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $29 million in HIVE’s case. Roadrunner Transportation Systems Inc (NYSE:RRTS) is the most popular stock in this table. On the other hand Plug Power Inc (NASDAQ:PLUG) is the least popular one with only 2 bullish hedge fund positions. Aerohive Networks Inc (NYSE:HIVE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard RRTS might be a better candidate to consider taking a long position in.
Disclosure: None
