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Airgain, Inc. (AIRG): Are Hedge Funds Right About This Stock?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Airgain, Inc. (NASDAQ:AIRG) based on that data.

Hedge fund interest in Airgain, Inc. (NASDAQ:AIRG) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare AIRG to other stocks including Rhinebeck Bancorp, Inc. (NASDAQ:RBKB), TFF Pharmaceuticals, Inc. (NASDAQ:TFFP), and Wellesley Bancorp, Inc. (NASDAQ:WEBK) to get a better sense of its popularity.

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 51 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.

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

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 stocks recommended/scorned by legendary Bill Miller. 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. Now we’re going to analyze the latest hedge fund action surrounding Airgain, Inc. (NASDAQ:AIRG).

How are hedge funds trading Airgain, Inc. (NASDAQ:AIRG)?

At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2019. On the other hand, there were a total of 9 hedge funds with a bullish position in AIRG a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Renaissance Technologies has the largest position in Airgain, Inc. (NASDAQ:AIRG), worth close to $3 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is David Harding of Winton Capital Management, with a $0.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism encompass John Overdeck and David Siegel’s Two Sigma Advisors, D. E. Shaw’s D E Shaw and . In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to Airgain, Inc. (NASDAQ:AIRG), around 0.0042% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.003 percent of its 13F equity portfolio to AIRG.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Springbok Capital. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Two Sigma Advisors).

Let’s also examine hedge fund activity in other stocks similar to Airgain, Inc. (NASDAQ:AIRG). These stocks are Rhinebeck Bancorp, Inc. (NASDAQ:RBKB), TFF Pharmaceuticals, Inc. (NASDAQ:TFFP), Wellesley Bancorp, Inc. (NASDAQ:WEBK), and Akorn, Inc. (NASDAQ:AKRX). This group of stocks’ market valuations resemble AIRG’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RBKB 2 4488 0
TFFP 2 2438 0
WEBK 3 2053 -1
AKRX 12 13989 -2
Average 4.75 5742 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $3 million in AIRG’s case. Akorn, Inc. (NASDAQ:AKRX) is the most popular stock in this table. On the other hand Rhinebeck Bancorp, Inc. (NASDAQ:RBKB) is the least popular one with only 2 bullish hedge fund positions. Airgain, Inc. (NASDAQ:AIRG) is not the least popular stock in this group but hedge fund interest is still below average. 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 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. A small number of hedge funds were also right about betting on AIRG as the stock returned 22.2% during the second quarter and outperformed the market by an even larger margin.

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