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Hedge Funds Have Never Been This Bullish On Bandwidth Inc. (BAND)

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 Bandwidth Inc. (NASDAQ:BAND) based on that data.

Is Bandwidth Inc. (NASDAQ:BAND) worth your attention right now? The smart money is in a bullish mood. The number of bullish hedge fund bets went up by 15 in recent months. Our calculations also showed that BAND 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). BAND was in 33 hedge funds’ portfolios at the end of March. There were 18 hedge funds in our database with BAND positions at the end of the previous quarter.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Michael Platt BlueCrest Capital

Michael Platt of BlueCrest Capital Mgmt.

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 look at the key hedge fund action encompassing Bandwidth Inc. (NASDAQ:BAND).

What does smart money think about Bandwidth Inc. (NASDAQ:BAND)?

At the end of the first quarter, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 83% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards BAND over the last 18 quarters. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Alta Park Capital, managed by Bijan Modanlou, Joseph Bou-Saba, and Jayaveera Kodali, holds the most valuable position in Bandwidth Inc. (NASDAQ:BAND). Alta Park Capital has a $33 million position in the stock, comprising 12.3% of its 13F portfolio. Sitting at the No. 2 spot is Portolan Capital Management, managed by George McCabe, which holds a $23.8 million position; the fund has 3.6% of its 13F portfolio invested in the stock. Some other peers with similar optimism comprise Steve Cohen’s Point72 Asset Management, Josh Goldberg’s G2 Investment Partners Management and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Alta Park Capital allocated the biggest weight to Bandwidth Inc. (NASDAQ:BAND), around 12.26% of its 13F portfolio. G2 Investment Partners Management is also relatively very bullish on the stock, dishing out 6.21 percent of its 13F equity portfolio to BAND.

As aggregate interest increased, key hedge funds were breaking ground themselves. G2 Investment Partners Management, managed by Josh Goldberg, initiated the most outsized position in Bandwidth Inc. (NASDAQ:BAND). G2 Investment Partners Management had $18.8 million invested in the company at the end of the quarter. Jeff Osher’s No Street Capital also made a $9.8 million investment in the stock during the quarter. The following funds were also among the new BAND investors: Richard Driehaus’s Driehaus Capital, Highbridge Capital Management, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Bandwidth Inc. (NASDAQ:BAND) but similarly valued. These stocks are Cleveland-Cliffs Inc (NYSE:CLF), ServisFirst Bancshares, Inc. (NASDAQ:SFBS), Phoenix Tree Holdings Limited (NYSE:DNK), and National Vision Holdings, Inc. (NASDAQ:EYE). This group of stocks’ market valuations resemble BAND’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CLF 23 77492 -8
SFBS 10 10012 1
DNK 3 21532 3
EYE 14 199114 -1
Average 12.5 77038 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $195 million in BAND’s case. Cleveland-Cliffs Inc (NYSE:CLF) is the most popular stock in this table. On the other hand Phoenix Tree Holdings Limited (NYSE:DNK) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Bandwidth Inc. (NASDAQ:BAND) 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 returned 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on BAND as the stock returned 64.7% so far in Q2 (through the end of May) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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