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Here’s What Hedge Funds Think About Boingo Wireless Inc (WIFI)

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren’t usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index’s returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you’d fail to beat the market. At the same time, the 20 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated an outperformance of 6 percentage points during the first 5 months of 2019. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Boingo Wireless Inc (NASDAQ:WIFI).

Is Boingo Wireless Inc (NASDAQ:WIFI) going to take off soon? Investors who are in the know are in a pessimistic mood. The number of long hedge fund bets shrunk by 1 lately. Our calculations also showed that wifi isn’t among the 30 most popular stocks among hedge funds. WIFI was in 17 hedge funds’ portfolios at the end of the first quarter of 2019. There were 18 hedge funds in our database with WIFI holdings at the end of the previous quarter.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

We’re going to take a glance at the recent hedge fund action surrounding Boingo Wireless Inc (NASDAQ:WIFI).

How are hedge funds trading Boingo Wireless Inc (NASDAQ:WIFI)?

At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WIFI over the last 15 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

No of Hedge Funds with WIFI Positions

Among these funds, Renaissance Technologies held the most valuable stake in Boingo Wireless Inc (NASDAQ:WIFI), which was worth $67 million at the end of the first quarter. On the second spot was Daruma Asset Management which amassed $24.6 million worth of shares. Moreover, Two Sigma Advisors, Park West Asset Management, and Marshall Wace LLP were also bullish on Boingo Wireless Inc (NASDAQ:WIFI), allocating a large percentage of their portfolios to this stock.

Seeing as Boingo Wireless Inc (NASDAQ:WIFI) has faced a decline in interest from the smart money, it’s easy to see that there lies a certain “tier” of funds that slashed their full holdings by the end of the third quarter. Intriguingly, Josh Goldberg’s G2 Investment Partners Management cut the largest investment of all the hedgies monitored by Insider Monkey, worth close to $5.8 million in stock, and John Osterweis’s Osterweis Capital Management was right behind this move, as the fund sold off about $4.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Boingo Wireless Inc (NASDAQ:WIFI) but similarly valued. We will take a look at Apogee Enterprises, Inc. (NASDAQ:APOG), OFG Bancorp (NYSE:OFG), Victory Capital Holdings, Inc. (NASDAQ:VCTR), and Stewart Information Services Corp (NYSE:STC). This group of stocks’ market caps are similar to WIFI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
APOG 11 144883 -5
OFG 20 74193 3
VCTR 13 61732 3
STC 17 139746 3
Average 15.25 105139 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $137 million in WIFI’s case. OFG Bancorp (NYSE:OFG) is the most popular stock in this table. On the other hand Apogee Enterprises, Inc. (NASDAQ:APOG) is the least popular one with only 11 bullish hedge fund positions. Boingo Wireless Inc (NASDAQ:WIFI) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately WIFI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on WIFI were disappointed as the stock returned -13.5% during the same period 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 13 of these stocks already outperformed the market so far in Q2.

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

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