Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Shenandoah Telecommunications Company (NASDAQ:SHEN) was in 11 hedge funds’ portfolios at the end of September. SHEN investors should be aware of an increase in support from the world’s most successful money managers recently. There were 8 hedge funds in our database with SHEN positions 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 Petrobras Argentina SA ADR (NYSE:PZE), Barracuda Networks Inc (NYSE:CUDA), and The E.W. Scripps Company (NYSE:SSP) to gather more data points.
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Follow Shenandoah Telecommunications Co
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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Keeping this in mind, we’re going to take a glance at the key action encompassing Shenandoah Telecommunications Company (NASDAQ:SHEN).
How have hedgies been trading Shenandoah Telecommunications Company (NASDAQ:SHEN)?
Heading into the fourth quarter of 2016, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in SHEN over the last 5 quarters. So, let’s find out 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, Renaissance Technologies, one of the largest hedge funds in the world, holds the largest position in Shenandoah Telecommunications Company (NASDAQ:SHEN). Renaissance Technologies has a $34 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Mario Gabelli of GAMCO Investors, with a $4.3 million position; less than 0.1% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish encompass Cliff Asness’s AQR Capital Management, and Roger Ibbotson’s Zebra Capital Management. We should note that none of these elite funds are among our list of the 100 best performing elite funds which is based on the performance of their 13F long positions in non-microcap stocks.
As one would reasonably expect, some big names have been driving this bullishness. Millennium Management, led by Israel Englander, initiated the biggest position in Shenandoah Telecommunications Company (NASDAQ:SHEN). Millennium Management had $1.5 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.6 million position during the quarter. The other funds with new positions in the stock are Michael Platt and William Reeves’s BlueCrest Capital Mgmt., Ken Griffin’s Citadel Investment Group, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s check out hedge fund activity in other stocks similar to Shenandoah Telecommunications Company (NASDAQ:SHEN). These stocks are Petrobras Argentina SA ADR (NYSE:PZE), Barracuda Networks Inc (NYSE:CUDA), The E.W. Scripps Company (NYSE:SSP), and SUPERVALU INC. (NYSE:SVU). This group of stocks’ market valuations are similar to SHEN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PZE | 8 | 10710 | -1 |
| CUDA | 16 | 55788 | 4 |
| SSP | 10 | 175000 | 2 |
| SVU | 31 | 324342 | 3 |
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $141 million. That figure was $46 million in SHEN’s case. SUPERVALU INC. (NYSE:SVU) is the most popular stock in this table. On the other hand Petrobras Argentina SA ADR (NYSE:PZE) is the least popular one with only 8 bullish hedge fund positions. Shenandoah Telecommunications Company (NASDAQ:SHEN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SVU might be a better candidate to consider taking a long position in.
