Is APPS Stock A Buy or Sell?

With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was Digital Turbine Inc (NASDAQ:APPS).

Is APPS stock a buy? Digital Turbine Inc (NASDAQ:APPS) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 23 hedge funds’ portfolios at the end of December. Our calculations also showed that APPS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). 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 Medallia, Inc. (NYSE:MDLA), Regal Beloit Corporation (NYSE:RBC), and Medpace Holdings, Inc. (NASDAQ:MEDP) to gather more data points.

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 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Alex Litowitz of Magnetar Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. Now we’re going to analyze the latest hedge fund action regarding Digital Turbine Inc (NASDAQ:APPS).

Do Hedge Funds Think APPS Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in APPS 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.

The largest stake in Digital Turbine Inc (NASDAQ:APPS) was held by D E Shaw, which reported holding $96.4 million worth of stock at the end of December. It was followed by Greenhaven Road Investment Management with a $62.2 million position. Other investors bullish on the company included Driehaus Capital, Renaissance Technologies, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Greenhaven Road Investment Management allocated the biggest weight to Digital Turbine Inc (NASDAQ:APPS), around 13.09% of its 13F portfolio. P.A.W. CAPITAL PARTNERS is also relatively very bullish on the stock, designating 7.48 percent of its 13F equity portfolio to APPS.

Seeing as Digital Turbine Inc (NASDAQ:APPS) has faced bearish sentiment from the smart money, logic holds that there is a sect of funds that decided to sell off their positions entirely heading into Q1. Intriguingly, Adam Usdan’s Trellus Management Company said goodbye to the largest stake of the “upper crust” of funds followed by Insider Monkey, comprising about $9.1 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund dropped about $1.4 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Digital Turbine Inc (NASDAQ:APPS) but similarly valued. These stocks are Medallia, Inc. (NYSE:MDLA), Regal Beloit Corporation (NYSE:RBC), Medpace Holdings, Inc. (NASDAQ:MEDP), Cousins Properties Incorporated (NYSE:CUZ), Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR), The Descartes Systems Group Inc (NASDAQ:DSGX), and TFS Financial Corporation (NASDAQ:TFSL). This group of stocks’ market values match APPS’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $212 million. That figure was $318 million in APPS’s case. Regal Beloit Corporation (NYSE:RBC) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR) is the least popular one with only 10 bullish hedge fund positions. Digital Turbine Inc (NASDAQ:APPS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for APPS is 78.3. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on APPS as the stock returned 27% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.