We at Insider Monkey have gone over 866 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. In this article, we look at what those funds think of Bandwidth Inc. (NASDAQ:BAND) based on that data.
Bandwidth Inc. (NASDAQ:BAND) investors should be aware of a decrease in hedge fund sentiment of late. Bandwidth Inc. (NASDAQ:BAND) was in 24 hedge funds’ portfolios at the end of March. The all time high for this statistic is 33. Our calculations also showed that BAND isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
At the moment there are a lot of gauges stock traders put to use to appraise stocks. Two of the most underrated gauges are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the best hedge fund managers can beat their index-focused peers by a significant amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to analyze the recent hedge fund action surrounding Bandwidth Inc. (NASDAQ:BAND).
Do Hedge Funds Think BAND Is A Good Stock To Buy Now?
At first quarter’s end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from one quarter earlier. On the other hand, there were a total of 33 hedge funds with a bullish position in BAND a year ago. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
The largest stake in Bandwidth Inc. (NASDAQ:BAND) was held by Point72 Asset Management, which reported holding $35.6 million worth of stock at the end of December. It was followed by Alta Park Capital with a $35.5 million position. Other investors bullish on the company included Citadel Investment Group, Royce & Associates, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Alta Park Capital allocated the biggest weight to Bandwidth Inc. (NASDAQ:BAND), around 3.66% of its 13F portfolio. Portolan Capital Management is also relatively very bullish on the stock, dishing out 1.27 percent of its 13F equity portfolio to BAND.
Seeing as Bandwidth Inc. (NASDAQ:BAND) has faced declining sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few funds who were dropping their entire stakes last quarter. At the top of the heap, Richard Driehaus’s Driehaus Capital said goodbye to the biggest position of the 750 funds monitored by Insider Monkey, comprising an estimated $39.6 million in stock. Robert Smith’s fund, Vista Equity Partners, also dropped its stock, about $20.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 7 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Bandwidth Inc. (NASDAQ:BAND). We will take a look at Outfront Media Inc. (REIT) (NYSE:OUT), Wolverine World Wide, Inc. (NYSE:WWW), Trinity Industries, Inc. (NYSE:TRN), Empire State Realty OP, L.P. (NYSE:ESBA), Cohen & Steers, Inc. (NYSE:CNS), Evoqua Water Technologies Corp. (NYSE:AQUA), and United States Cellular Corporation (NYSE:USM). This group of stocks’ market values are closest to BAND’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $338 million. That figure was $268 million in BAND’s case. Outfront Media Inc. (REIT) (NYSE:OUT) is the most popular stock in this table. On the other hand Empire State Realty OP, L.P. (NYSE:ESBA) is the least popular one with only 1 bullish hedge fund positions. Bandwidth Inc. (NASDAQ:BAND) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BAND is 48.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately BAND wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on BAND were disappointed as the stock returned 1.6% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Bandwidth Inc. (NASDAQ:BAND)
Follow Bandwidth Inc. (NASDAQ:BAND)
Disclosure: None. This article was originally published at Insider Monkey.