Is Shenandoah Telecommunications Company (NASDAQ:SHEN) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Shenandoah Telecommunications Company (NASDAQ:SHEN) was in 15 hedge funds’ portfolios at the end of September. SHEN investors should pay attention to a decrease in support from the world’s most elite money managers recently. There were 18 hedge funds in our database with SHEN positions at the end of the previous quarter. Our calculations also showed that SHEN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are dozens of gauges investors employ to size up publicly traded companies. A couple of the most under-the-radar gauges are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the elite money managers can outpace the broader indices by a very impressive margin (see the details here).
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a peek at the recent hedge fund action encompassing Shenandoah Telecommunications Company (NASDAQ:SHEN).
What have hedge funds been doing with Shenandoah Telecommunications Company (NASDAQ:SHEN)?
Heading into the fourth quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in SHEN a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Shenandoah Telecommunications Company (NASDAQ:SHEN), which was worth $48.8 million at the end of the third quarter. On the second spot was Millennium Management which amassed $7.9 million worth of shares. Citadel Investment Group, AQR Capital Management, and GAMCO Investors 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 Quantinno Capital allocated the biggest weight to Shenandoah Telecommunications Company (NASDAQ:SHEN), around 0.22% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, setting aside 0.05 percent of its 13F equity portfolio to SHEN.
Because Shenandoah Telecommunications Company (NASDAQ:SHEN) has witnessed a decline in interest from hedge fund managers, it’s safe to say that there exists a select few hedge funds that decided to sell off their entire stakes by the end of the third quarter. At the top of the heap, Genevieve Kahr’s Ailanthus Capital Management cut the biggest stake of all the hedgies watched by Insider Monkey, worth about $8.2 million in stock. Sander Gerber’s fund, Hudson Bay Capital Management, also cut its stock, about $3.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 3 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Shenandoah Telecommunications Company (NASDAQ:SHEN) but similarly valued. These stocks are Kaiser Aluminum Corp. (NASDAQ:KALU), Hub Group Inc (NASDAQ:HUBG), Alder Biopharmaceuticals Inc (NASDAQ:ALDR), and Insmed Incorporated (NASDAQ:INSM). All of these stocks’ market caps are similar to SHEN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KALU | 20 | 118922 | 5 |
| HUBG | 21 | 255820 | 3 |
| ALDR | 29 | 829615 | 14 |
| INSM | 22 | 372563 | -1 |
| Average | 23 | 394230 | 5.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $394 million. That figure was $79 million in SHEN’s case. Alder Biopharmaceuticals Inc (NASDAQ:ALDR) is the most popular stock in this table. On the other hand Kaiser Aluminum Corp. (NASDAQ:KALU) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Shenandoah Telecommunications Company (NASDAQ:SHEN) is even less popular than KALU. Hedge funds clearly dropped the ball on SHEN as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on SHEN as the stock returned 19.1% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
