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Did Hedge Funds Drop The Ball On SBA Communications Corporation (SBAC) ?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31 holdings, data that is available nowhere else. Should you consider SBA Communications Corporation (NASDAQ:SBAC) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is SBA Communications Corporation (NASDAQ:SBAC) going to take off soon? Prominent investors are getting less bullish. The number of bullish hedge fund positions retreated by 3 recently. Our calculations also showed that sbac isn’t among the 30 most popular stocks among hedge funds.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 40 percentage points since May 2014 through May 30, 2019 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

MILLENNIUM MANAGEMENT

We’re going to take a look at the fresh hedge fund action surrounding SBA Communications Corporation (NASDAQ:SBAC).

Hedge fund activity in SBA Communications Corporation (NASDAQ:SBAC)

Heading into the second quarter of 2019, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from one quarter earlier. On the other hand, there were a total of 42 hedge funds with a bullish position in SBAC a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with SBAC Positions

The largest stake in SBA Communications Corporation (NASDAQ:SBAC) was held by Akre Capital Management, which reported holding $492.2 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $358.3 million position. Other investors bullish on the company included Two Sigma Advisors, Millennium Management, and D E Shaw.

Due to the fact that SBA Communications Corporation (NASDAQ:SBAC) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of hedgies that slashed their full holdings in the third quarter. At the top of the heap, Matthew Hulsizer’s PEAK6 Capital Management said goodbye to the biggest position of all the hedgies watched by Insider Monkey, comprising an estimated $8.1 million in stock, and Eduardo Abush’s Waterfront Capital Partners was right behind this move, as the fund dropped about $7.9 million worth. These transactions are important to note, as total hedge fund interest was cut by 3 funds in the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as SBA Communications Corporation (NASDAQ:SBAC) but similarly valued. These stocks are McKesson Corporation (NYSE:MCK), Realty Income Corporation (NYSE:O), Concho Resources Inc. (NYSE:CXO), and TELUS Corporation (NYSE:TU). This group of stocks’ market values match SBAC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MCK 32 1989051 -12
O 15 175737 -3
CXO 26 530505 -9
TU 13 336110 2
Average 21.5 757851 -5.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $758 million. That figure was $1659 million in SBAC’s case. McKesson Corporation (NYSE:MCK) is the most popular stock in this table. On the other hand TELUS Corporation (NYSE:TU) is the least popular one with only 13 bullish hedge fund positions. SBA Communications Corporation (NASDAQ:SBAC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on SBAC as the stock returned 6.5% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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

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