How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Mobileiron Inc (NASDAQ:MOBL) and determine whether hedge funds had an edge regarding this stock.
Is Mobileiron Inc (NASDAQ:MOBL) ready to rally soon? Money managers were buying. The number of long hedge fund bets went up by 5 lately. Mobileiron Inc (NASDAQ:MOBL) was in 20 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 18. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that MOBL isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 15 hedge funds in our database with MOBL positions at the end of the first quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ian Wace of Marshall Wace
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox.Now let’s take a look at the key hedge fund action encompassing Mobileiron Inc (NASDAQ:MOBL).
What have hedge funds been doing with Mobileiron Inc (NASDAQ:MOBL)?
At the end of the second quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the previous quarter. By comparison, 17 hedge funds held shares or bullish call options in MOBL a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Lynrock Lake was the largest shareholder of Mobileiron Inc (NASDAQ:MOBL), with a stake worth $63.9 million reported as of the end of September. Trailing Lynrock Lake was Altai Capital, which amassed a stake valued at $39.2 million. Renaissance Technologies, Divisar Capital, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Altai Capital allocated the biggest weight to Mobileiron Inc (NASDAQ:MOBL), around 41.12% of its 13F portfolio. Lynrock Lake is also relatively very bullish on the stock, setting aside 5.02 percent of its 13F equity portfolio to MOBL.
As one would reasonably expect, key money managers have been driving this bullishness. Portolan Capital Management, managed by George McCabe, initiated the most outsized position in Mobileiron Inc (NASDAQ:MOBL). Portolan Capital Management had $3.3 million invested in the company at the end of the quarter. Chuck Royce’s Royce & Associates also made a $0.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Schonfeld Strategic Advisors, and Adam Usdan’s Trellus Management Company.
Let’s check out hedge fund activity in other stocks similar to Mobileiron Inc (NASDAQ:MOBL). These stocks are Great Southern Bancorp, Inc. (NASDAQ:GSBC), Maverix Metals Inc. (NYSE:MMX), Northfield Bancorp Inc (NASDAQ:NFBK), Endurance International Group Holdings Inc (NASDAQ:EIGI), Washington Trust Bancorp (NASDAQ:WASH), MSG Networks Inc (NYSE:MSGN), and Cass Information Systems (NASDAQ:CASS). This group of stocks’ market caps are closest to MOBL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GSBC | 10 | 28043 | -2 |
| MMX | 5 | 30670 | 2 |
| NFBK | 7 | 30791 | 1 |
| EIGI | 15 | 67698 | 2 |
| WASH | 12 | 28455 | 5 |
| MSGN | 25 | 188336 | 1 |
| CASS | 9 | 14160 | 0 |
| Average | 11.9 | 55450 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.9 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $152 million in MOBL’s case. MSG Networks Inc (NYSE:MSGN) is the most popular stock in this table. On the other hand Maverix Metals Inc. (NYSE:MMX) is the least popular one with only 5 bullish hedge fund positions. Mobileiron Inc (NASDAQ:MOBL) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for MOBL is 40. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of third quarter and still beat the market by 19.3 percentage points. Hedge funds were also right about betting on MOBL as the stock returned 42.2% during Q3 and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
