At Insider Monkey we follow around 700 of the best-performing investors and even though many of them lost money in the last couple of months (70% of hedge funds lost money in October whereas S&P 500 ETF lost about 7%), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.
Internap Corporation (NASDAQ:INAP) was in 14 hedge funds’ portfolios at the end of the third quarter of 2018. INAP investors should pay attention to an increase in support from the world’s most elite money managers of late. There were 11 hedge funds in our database with INAP holdings at the end of the previous quarter. Our calculations also showed that inap 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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to take a gander at the new hedge fund action surrounding Internap Corporation (NASDAQ:INAP).
Hedge fund activity in Internap Corporation (NASDAQ:INAP)
At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards INAP over the last 13 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.
More specifically, GAMCO Investors was the largest shareholder of Internap Corporation (NASDAQ:INAP), with a stake worth $27.9 million reported as of the end of September. Trailing GAMCO Investors was Portolan Capital Management, which amassed a stake valued at $16.7 million. Cannell Capital, Millennium Management, and Proxima Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Now, specific money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the most outsized position in Internap Corporation (NASDAQ:INAP). Millennium Management had $4.9 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $3.3 million position during the quarter. The other funds with new positions in the stock are Keith M. Rosenbloom’s Cruiser Capital Advisors, Matthew Hulsizer’s PEAK6 Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Internap Corporation (NASDAQ:INAP) but similarly valued. We will take a look at Mudrick Capital Acquisition Corporation Units (NASDAQ:MUDSU), Solar Senior Capital Ltd (NASDAQ:SUNS), Ardelyx Inc (NASDAQ:ARDX), and Bellicum Pharmaceuticals Inc (NASDAQ:BLCM). This group of stocks’ market valuations match INAP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MUDSU | 10 | 46863 | 0 |
| SUNS | 2 | 882 | 0 |
| ARDX | 18 | 61207 | -1 |
| BLCM | 9 | 41791 | 0 |
| Average | 9.75 | 37686 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $67 million in INAP’s case. Ardelyx Inc (NASDAQ:ARDX) is the most popular stock in this table. On the other hand Solar Senior Capital Ltd (NASDAQ:SUNS) is the least popular one with only 2 bullish hedge fund positions. Internap Corporation (NASDAQ:INAP) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ARDX might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
