The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Vonage Holdings Corp. (NYSE:VG) based on those filings.
Vonage Holdings Corp. (NYSE:VG) was in 22 hedge funds’ portfolios at the end of December. VG investors should pay attention to a decrease in hedge fund sentiment in recent months. There were 26 hedge funds in our database with VG holdings at the end of the previous quarter. Our calculations also showed that vg isn’t among the 30 most popular stocks among hedge funds.
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s take a glance at the recent hedge fund action surrounding Vonage Holdings Corp. (NYSE:VG).
How are hedge funds trading Vonage Holdings Corp. (NYSE:VG)?
At the end of the fourth quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the second quarter of 2018. On the other hand, there were a total of 23 hedge funds with a bullish position in VG a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
Among these funds, Legion Partners Asset Management held the most valuable stake in Vonage Holdings Corp. (NYSE:VG), which was worth $32.4 million at the end of the fourth quarter. On the second spot was Southpoint Capital Advisors which amassed $30.7 million worth of shares. Moreover, Marshall Wace LLP, Renaissance Technologies, and Millennium Management were also bullish on Vonage Holdings Corp. (NYSE:VG), allocating a large percentage of their portfolios to this stock.
Seeing as Vonage Holdings Corp. (NYSE:VG) has experienced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of money managers that decided to sell off their full holdings last quarter. At the top of the heap, Charles Frumberg’s Emancipation Capital dropped the largest investment of all the hedgies monitored by Insider Monkey, worth close to $1.6 million in stock. Alec Litowitz and Ross Laser’s fund, Magnetar Capital, also dropped its stock, about $0.8 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 4 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Vonage Holdings Corp. (NYSE:VG). These stocks are Applied Industrial Technologies, Inc. (NYSE:AIT), Evertec Inc (NYSE:EVTC), Sogou Inc. (NYSE:SOGO), and Colliers International Group Inc (NASDAQ:CIGI). This group of stocks’ market values resemble VG’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $219 million. That figure was $155 million in VG’s case. Evertec Inc (NYSE:EVTC) is the most popular stock in this table. On the other hand Sogou Inc. (NYSE:SOGO) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Vonage Holdings Corp. (NYSE:VG) is more popular among hedge funds. 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 VG wasn’t nearly as popular as these 15 stock and hedge funds that were betting on VG were disappointed as the stock returned 8.5% 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.