Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Is Box Inc (NYSE:BOX) an excellent investment right now? Money managers are in a bearish mood. The number of bullish hedge fund bets were trimmed by 2 in recent months. At the end of this article, we will also compare Box Inc (NYSE:BOX) to other stocks, including Etsy Inc (NASDAQ:ETSY), Wayfair Inc (NYSE:W), and United States Steel Corporation (NYSE:X) to get a better sense of its popularity.
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In the financial world, there are dozens of metrics market participants can use to appraise stocks. A duo of the less known metrics are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outclass the S&P 500 by a superb margin (see the details here).
Keeping this in mind, let’s analyze the fresh action surrounding Box Inc (NYSE:BOX).
How have hedgies been trading Box Inc (NYSE:BOX)?
Heading into Q4, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 22% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Philippe Laffont’s Coatue Management has the biggest position in Box Inc (NYSE:BOX), worth close to $38 million, comprising 0.4% of its total 13F portfolio. The second most bullish fund manager is Altimeter Capital Management, managed by Brad Gerstner, which holds a $5 million position; 0.3% of its 13F portfolio is allocated to the company. Some other peers that hold long positions consist of Ken Griffin’s Citadel Investment Group, Renaissance Technologies, and Israel Englander’s Millennium Management.
Seeing as Box Inc (NYSE:BOX) has witnessed falling interest from the entirety of the hedge funds we track, logic holds that there was a specific group of fund managers who sold off their positions entirely in the third quarter. Interestingly, Peter Muller’s PDT Partners said goodbye to the largest investment of the 700 funds watched by Insider Monkey, comprising close to $1.8 million in stock, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt. was right behind this move, as the fund dropped about $1.6 million worth of shares. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 2 funds in the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Box Inc (NYSE:BOX) but similarly valued. We will take a look at Etsy Inc (NASDAQ:ETSY), Wayfair Inc (NYSE:W), United States Steel Corporation (NYSE:X), and Nationstar Mortgage Holdings Inc (NYSE:NSM). This group of stocks’ market caps is similar to Box Inc (NYSE:BOX)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ETSY | 3 | 138220 | -6 |
| W | 28 | 356539 | 15 |
| X | 25 | 97151 | -4 |
| NSM | 22 | 1282540 | 0 |
As you can see, these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $469 million. That figure was $52 million in Box Inc (NYSE:BOX)’s case. Wayfair Inc (NYSE:W) is the most popular stock in this table. On the other hand, Etsy Inc (NASDAQ:ETSY) is the least popular one with only 3 bullish hedge fund positions. Box Inc (NYSE:BOX) 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. In this regard, Wayfair Inc (NYSE:W) might be a better candidate to consider a long position.
