The first quarter was a breeze as Powell pivoted, and China seemed eager to reach a deal with Trump. Both the S&P 500 and Russell 2000 delivered very strong gains as a result, with the Russell 2000, which is composed of smaller companies, outperforming the large-cap stocks slightly during the first quarter. Unfortunately sentiment shifted in May as this time China pivoted and Trump put more pressure on China by increasing tariffs. Hedge funds’ top 20 stock picks performed spectacularly in this volatile environment. These stocks delivered a total gain of 18.7% through May 30th, vs. a gain of 12.1% for the S&P 500 ETF. In this article we will look at how this market volatility affected the sentiment of hedge funds towards ViaSat, Inc. (NASDAQ:VSAT), and what that likely means for the prospects of the company and its stock.
Is ViaSat, Inc. (NASDAQ:VSAT) a healthy stock for your portfolio? The smart money is buying. The number of bullish hedge fund positions improved by 3 lately. Our calculations also showed that VSAT isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Andrew Raab of FPR Partners
We’re going to view the new hedge fund action regarding ViaSat, Inc. (NASDAQ:VSAT).
Hedge fund activity in ViaSat, Inc. (NASDAQ:VSAT)
At Q1’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in VSAT over the last 15 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Baupost Group, managed by Seth Klarman, holds the most valuable position in ViaSat, Inc. (NASDAQ:VSAT). Baupost Group has a $1.0642 billion position in the stock, comprising 8.9% of its 13F portfolio. The second most bullish fund manager is FPR Partners, managed by Bob Peck and Andy Raab, which holds a $442.4 million position; the fund has 10.8% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism comprise Crispin Odey’s Odey Asset Management Group, Mason Hawkins’s Southeastern Asset Management and Jeffrey Bronchick’s Cove Street Capital.
As one would reasonably expect, specific money managers were leading the bulls’ herd. Winton Capital Management, managed by David Harding, established the largest position in ViaSat, Inc. (NASDAQ:VSAT). Winton Capital Management had $11.7 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $5.7 million position during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Joel Greenblatt’s Gotham Asset Management, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ViaSat, Inc. (NASDAQ:VSAT) but similarly valued. We will take a look at First Citizens BancShares Inc. (NASDAQ:FCNCA), PLDT Inc. (NYSE:PHI), ONE Gas Inc (NYSE:OGS), and Cinemark Holdings, Inc. (NYSE:CNK). This group of stocks’ market values are closest to VSAT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FCNCA | 18 | 139967 | -4 |
| PHI | 5 | 67170 | 0 |
| OGS | 15 | 100719 | -2 |
| CNK | 20 | 226209 | 3 |
| Average | 14.5 | 133516 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $134 million. That figure was $2119 million in VSAT’s case. Cinemark Holdings, Inc. (NYSE:CNK) is the most popular stock in this table. On the other hand PLDT Inc. (NYSE:PHI) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks ViaSat, Inc. (NASDAQ:VSAT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on VSAT as the stock returned 15.3% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
