We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57% each. Hedge funds’ top 3 stock picks returned 45.7% last year and beat the S&P 500 ETFs by more than 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like ViaSat, Inc. (NASDAQ:VSAT).
ViaSat, Inc. (NASDAQ:VSAT) shareholders have witnessed a decrease in hedge fund interest in recent months. VSAT was in 27 hedge funds’ portfolios at the end of September. There were 28 hedge funds in our database with VSAT holdings at the end of the previous quarter. Our calculations also showed that VSAT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.
Seth Klarman of Baupost Group
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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock is still extremely cheap despite already gaining 20 percent. Keeping this in mind let’s take a glance at the new hedge fund action encompassing ViaSat, Inc. (NASDAQ:VSAT).
Hedge fund activity in ViaSat, Inc. (NASDAQ:VSAT)
Heading into the fourth quarter of 2019, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards VSAT over the last 17 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.
Of the funds tracked by Insider Monkey, Seth Klarman’s Baupost Group has the number one position in ViaSat, Inc. (NASDAQ:VSAT), worth close to $1.0343 billion, corresponding to 11.7% of its total 13F portfolio. The second most bullish fund manager is Bob Peck and Andy Raab of FPR Partners, with a $377.1 million position; 8.6% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions contain Crispin Odey’s Odey Asset Management Group, Mason Hawkins’s Southeastern Asset Management and David E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Odey Asset Management Group allocated the biggest weight to ViaSat, Inc. (NASDAQ:VSAT), around 17.34% of its 13F portfolio. Baupost Group is also relatively very bullish on the stock, designating 11.71 percent of its 13F equity portfolio to VSAT.
Due to the fact that ViaSat, Inc. (NASDAQ:VSAT) has experienced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedgies who sold off their positions entirely last quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management cut the largest stake of the 750 funds watched by Insider Monkey, worth close to $3.1 million in stock. Cliff Asness’s fund, AQR Capital Management, also cut its stock, about $0.9 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to ViaSat, Inc. (NASDAQ:VSAT). We will take a look at Foot Locker, Inc. (NYSE:FL), Avnet, Inc. (NASDAQ:AVT), The Wendy’s Company (NASDAQ:WEN), and Bilibili Inc. (NASDAQ:BILI). This group of stocks’ market caps are similar to VSAT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FL | 32 | 546398 | 0 |
| AVT | 28 | 678095 | 1 |
| WEN | 34 | 892985 | 10 |
| BILI | 18 | 383762 | -5 |
| Average | 28 | 625310 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $625 million. That figure was $1902 million in VSAT’s case. The Wendy’s Company (NASDAQ:WEN) is the most popular stock in this table. On the other hand Bilibili Inc. (NASDAQ:BILI) is the least popular one with only 18 bullish hedge fund positions. ViaSat, Inc. (NASDAQ:VSAT) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately VSAT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); VSAT investors were disappointed as the stock returned 24.2% in 2019 and trailed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 65 percent of these stocks already outperformed the market in 2019.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
