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Do Hedge Funds Love SBA Communications Corporation (SBAC)?

We at Insider Monkey have gone over 752 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 September 30th. In this article, we look at what those funds think of SBA Communications Corporation (NASDAQ:SBAC) based on that data.

SBA Communications Corporation (NASDAQ:SBAC) was in 37 hedge funds’ portfolios at the end of the third quarter of 2019. SBAC has experienced an increase in hedge fund sentiment lately. There were 31 hedge funds in our database with SBAC holdings at the end of the previous quarter. Our calculations also showed that SBAC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.

Izzy Englander of MILLENNIUM MANAGEMENT

Israel Englander of Millennium Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a peek at the key hedge fund action surrounding SBA Communications Corporation (NASDAQ:SBAC).

How are hedge funds trading SBA Communications Corporation (NASDAQ:SBAC)?

At the end of the third quarter, a total of 37 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19% from one quarter earlier. By comparison, 32 hedge funds held shares or bullish call options in SBAC a year ago. So, let’s find out 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

Among these funds, Akre Capital Management held the most valuable stake in SBA Communications Corporation (NASDAQ:SBAC), which was worth $594.4 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $323.4 million worth of shares. Arrowstreet Capital, Two Sigma Advisors, and Millennium Management 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 Akre Capital Management allocated the biggest weight to SBA Communications Corporation (NASDAQ:SBAC), around 5.86% of its portfolio. Peconic Partners is also relatively very bullish on the stock, dishing out 4.74 percent of its 13F equity portfolio to SBAC.

As one would reasonably expect, key money managers have been driving this bullishness. Akre Capital Management, managed by Charles Akre, assembled the biggest position in SBA Communications Corporation (NASDAQ:SBAC). Akre Capital Management had $594.4 million invested in the company at the end of the quarter. Stuart J. Zimmer’s Zimmer Partners also initiated a $21.7 million position during the quarter. The other funds with new positions in the stock are David Harding’s Winton Capital Management, Matthew Tewksbury’s Stevens Capital Management, and Joe DiMenna’s ZWEIG DIMENNA PARTNERS.

Let’s now take a look at hedge fund activity in other stocks similar to SBA Communications Corporation (NASDAQ:SBAC). These stocks are Ventas, Inc. (NYSE:VTR), Digital Realty Trust, Inc. (NYSE:DLR), Edison International (NYSE:EIX), and Dollar Tree, Inc. (NASDAQ:DLTR). This group of stocks’ market caps are similar to SBAC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VTR 14 352435 -4
DLR 17 135024 -1
EIX 27 1708824 -6
DLTR 49 1912359 0
Average 26.75 1027161 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $1027 million. That figure was $1538 million in SBAC’s case. Dollar Tree, Inc. (NASDAQ:DLTR) is the most popular stock in this table. On the other hand Ventas, Inc. (NYSE:VTR) is the least popular one with only 14 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately SBAC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on SBAC were disappointed as the stock returned -1.8% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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

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