ViaSat, Inc. (VSAT): Hedge Funds Taking Some Chips Off The Table

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of ViaSat, Inc. (NASDAQ:VSAT) based on that data.

Is ViaSat, Inc. (NASDAQ:VSAT) a bargain? Hedge funds are selling. The number of long hedge fund positions went down by 5 recently. Our calculations also showed that VSAT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 S&P 500 ETFs by 58 percentage points since March 2017 (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.

Seth Klarman of Baupost Group

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a gander at the new hedge fund action surrounding ViaSat, Inc. (NASDAQ:VSAT).

Hedge fund activity in ViaSat, Inc. (NASDAQ:VSAT)

At Q1’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -19% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards VSAT over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Baupost Group held the most valuable stake in ViaSat, Inc. (NASDAQ:VSAT), which was worth $493.3 million at the end of the third quarter. On the second spot was FPR Partners which amassed $228.7 million worth of shares. Southeastern Asset Management, Odey Asset Management Group, and Cove Street Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Odey Asset Management Group allocated the biggest weight to ViaSat, Inc. (NASDAQ:VSAT), around 10.99% of its 13F portfolio. FPR Partners is also relatively very bullish on the stock, earmarking 9.4 percent of its 13F equity portfolio to VSAT.

Since ViaSat, Inc. (NASDAQ:VSAT) has witnessed a decline in interest from the smart money, it’s safe to say that there was a specific group of fund managers that slashed their full holdings heading into Q4. Interestingly, Matthew Tewksbury’s Stevens Capital Management dumped the largest investment of the 750 funds monitored by Insider Monkey, worth close to $0.7 million in stock. Noam Gottesman’s fund, GLG Partners, also said goodbye to its stock, about $0.5 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 5 funds heading into Q4.

Let’s check out 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 Old National Bancorp (NASDAQ:ONB), HMS Holdings Corp. (NASDAQ:HMSY), LiveRamp Holdings, Inc. (NYSE:RAMP), and Piedmont Office Realty Trust, Inc. (NYSE:PDM). This group of stocks’ market values match VSAT’s market value.

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 $77 million. That figure was $948 million in VSAT’s case. HMS Holdings Corp. (NASDAQ:HMSY) is the most popular stock in this table. On the other hand Piedmont Office Realty Trust, Inc. (NYSE:PDM) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks ViaSat, Inc. (NASDAQ:VSAT) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. Unfortunately VSAT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on VSAT were disappointed as the stock returned 15% during the second quarter (through June 17th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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