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Hedge Funds Are Buying SBA Communications Corporation (SBAC)

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of SBA Communications Corporation (NASDAQ:SBAC).

Is SBA Communications Corporation (NASDAQ:SBAC) a buy, sell, or hold? Investors who are in the know are turning bullish. The number of bullish hedge fund bets improved by 4 recently. Our calculations also showed that SBAC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

At the moment there are numerous gauges stock market investors can use to assess their stock investments. A couple of the most useful gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the best hedge fund managers can outpace the market by a solid margin (see the details here).

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to go over the recent hedge fund action surrounding SBA Communications Corporation (NASDAQ:SBAC).

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

At the end of the fourth quarter, a total of 45 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SBAC over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Akre Capital Management held the most valuable stake in SBA Communications Corporation (NASDAQ:SBAC), which was worth $594 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $258.5 million worth of shares. Arrowstreet Capital, Two Sigma Advisors, and Citadel Investment Group 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 Land & Buildings Investment Management allocated the biggest weight to SBA Communications Corporation (NASDAQ:SBAC), around 5.47% of its 13F portfolio. Akre Capital Management is also relatively very bullish on the stock, designating 5.45 percent of its 13F equity portfolio to SBAC.

Now, key hedge funds were leading the bulls’ herd. Waterfront Capital Partners, managed by Eduardo Abush, initiated the most outsized position in SBA Communications Corporation (NASDAQ:SBAC). Waterfront Capital Partners had $14.4 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $6.4 million position during the quarter. The following funds were also among the new SBAC investors: Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors, Daniel S. Och’s OZ Management, and Schonfeld Strategic Advisors.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as SBA Communications Corporation (NASDAQ:SBAC) but similarly valued. We will take a look at Edison International (NYSE:EIX), MPLX LP (NYSE:MPLX), Square, Inc. (NYSE:SQ), and TD Ameritrade Holding Corp. (NASDAQ:AMTD). This group of stocks’ market caps match SBAC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EIX 34 1611946 6
MPLX 15 438138 0
SQ 56 2386749 6
AMTD 50 1411932 19
Average 38.75 1462191 7.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 38.75 hedge funds with bullish positions and the average amount invested in these stocks was $1462 million. That figure was $1560 million in SBAC’s case. Square, Inc. (NYSE:SQ) is the most popular stock in this table. On the other hand MPLX LP (NYSE:MPLX) is the least popular one with only 15 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but still beat the market by 5.5 percentage points. Hedge funds were also right about betting on SBAC as the stock returned 1.1% during the first quarter (through March 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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