Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Vonage Holdings Corp. (NYSE:VG) shareholders have witnessed an increase in support from the world’s most elite money managers of late. VG was in 26 hedge funds’ portfolios at the end of the third quarter of 2016. There were 24 hedge funds in our database with VG positions at the end of the previous quarter. At the end of this article we will also compare VG to other stocks including Provident Financial Services, Inc. (NYSE:PFS), ServisFirst Bancshares, Inc. (NASDAQ:SFBS), and Astec Industries, Inc. (NASDAQ:ASTE) to get a better sense of its popularity.
Follow Vonage Holdings Corp (NYSE:VG)
Follow Vonage Holdings Corp (NYSE:VG)
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.
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Now, let’s take a look at the key action encompassing Vonage Holdings Corp. (NYSE:VG).
How are hedge funds trading Vonage Holdings Corp. (NYSE:VG)?
At Q3’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, up 8% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Jim Simons’s Renaissance Technologies has the most valuable position in Vonage Holdings Corp. (NYSE:VG), worth close to $43.2 million, corresponding to 0.1% of its total 13F portfolio. The second most bullish fund manager is Portolan Capital Management, run by George McCabe, which holds a $24.7 million position; 3.4% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish comprise Alex Sacerdote’s Whale Rock Capital Management, Neal Shah’s Valtura Capital Partners and Philip Hempleman’s Ardsley Partners.
As industrywide interest jumped, some big names have been driving this bullishness. Whale Rock Capital Management, managed by Alex Sacerdote, assembled the largest position in Vonage Holdings Corp. (NYSE:VG). According to regulatory filings, the fund had $15.5 million invested in the company at the end of the quarter. Philip Hempleman’s Ardsley Partners also made a $10.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Amish Mehta’s SQN Investors, Scott Lawrence Swid’s SLS Management, and Dennis Leibowitz’s Act II Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Vonage Holdings Corp. (NYSE:VG). We will take a look at Provident Financial Services, Inc. (NYSE:PFS), ServisFirst Bancshares, Inc. (NASDAQ:SFBS), Astec Industries, Inc. (NASDAQ:ASTE), and Inphi Corporation (NYSE:IPHI). This group of stocks’ market caps resemble VG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PFS | 5 | 21749 | 1 |
| SFBS | 6 | 12089 | 1 |
| ASTE | 16 | 125842 | 1 |
| IPHI | 32 | 291030 | 7 |
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $113 million. That figure was $165 million in VG’s case. Inphi Corporation (NYSE:IPHI) is the most popular stock in this table. On the other hand Provident Financial Services, Inc. (NYSE:PFS) is the least popular one with only 5 bullish hedge fund positions. Vonage Holdings Corp. (NYSE:VG) 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 IPHI might be a better candidate to consider a long position.
Disclosure: none.
