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Hedge Funds Have Never Been This Bullish On Sonos, Inc. (SONO)

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ recent losses in Facebook. Let’s take a closer look at what the funds we track think about Sonos, Inc. (NASDAQ:SONO) in this article.

Sonos, Inc. (NASDAQ:SONO) was in 12 hedge funds’ portfolios at the end of December. SONO shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. There were 10 hedge funds in our database with SONO holdings at the end of the previous quarter. Our calculations also showed that SONO isn’t among the 30 most popular stocks among hedge funds.

According to most market participants, hedge funds are perceived as worthless, outdated investment vehicles of the past. While there are greater than 8000 funds with their doors open at present, Our researchers choose to focus on the leaders of this group, about 750 funds. These investment experts watch over the majority of the hedge fund industry’s total capital, and by paying attention to their unrivaled picks, Insider Monkey has identified several investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by nearly 5 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

David Brown Hawk Ridge Partners

Let’s check out the key hedge fund action encompassing Sonos, Inc. (NASDAQ:SONO).

What have hedge funds been doing with Sonos, Inc. (NASDAQ:SONO)?

At the end of the fourth quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in SONO over the last 14 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

SONO_apr2019

The largest stake in Sonos, Inc. (NASDAQ:SONO) was held by Citadel Investment Group, which reported holding $7 million worth of stock at the end of December. It was followed by Bloom Tree Partners with a $4.2 million position. Other investors bullish on the company included HBK Investments, Alta Park Capital, and Point72 Asset Management.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into Sonos, Inc. (NASDAQ:SONO) headfirst. Bloom Tree Partners, managed by Alok Agrawal, initiated the most outsized position in Sonos, Inc. (NASDAQ:SONO). Bloom Tree Partners had $4.2 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $2 million position during the quarter. The following funds were also among the new SONO investors: David Brown’s Hawk Ridge Management, Dmitry Balyasny’s Balyasny Asset Management, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s now review hedge fund activity in other stocks similar to Sonos, Inc. (NASDAQ:SONO). These stocks are Cardiovascular Systems Inc (NASDAQ:CSII), ConvergeOne Holdings, Inc. (NASDAQ:CVON), Astronics Corporation (NASDAQ:ATRO), and Stewart Information Services Corp (NYSE:STC). This group of stocks’ market values resemble SONO’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CSII 21 153645 -1
CVON 5 72749 2
ATRO 7 61193 -3
STC 14 148887 -6
Average 11.75 109119 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $109 million. That figure was $24 million in SONO’s case. Cardiovascular Systems Inc (NASDAQ:CSII) is the most popular stock in this table. On the other hand ConvergeOne Holdings, Inc. (NASDAQ:CVON) is the least popular one with only 5 bullish hedge fund positions. Sonos, Inc. (NASDAQ:SONO) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately SONO wasn’t nearly as popular as these 15 stock and hedge funds that were betting on SONO were disappointed as the stock returned 16.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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

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