We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Peltz’s recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Airgain, Inc. (NASDAQ:AIRG).
Is AIRG a good stock to buy now? Airgain, Inc. (NASDAQ:AIRG) was in 8 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 12. AIRG shareholders have witnessed a decrease in enthusiasm from smart money lately. There were 10 hedge funds in our database with AIRG positions at the end of the second quarter. Our calculations also showed that AIRG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 website. With all of this in mind we’re going to check out the key hedge fund action regarding Airgain, Inc. (NASDAQ:AIRG).
What have hedge funds been doing with Airgain, Inc. (NASDAQ:AIRG)?
At third quarter’s end, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in AIRG a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Airgain, Inc. (NASDAQ:AIRG), which was worth $6.4 million at the end of the third quarter. On the second spot was North Run Capital which amassed $2 million worth of shares. Lynrock Lake, Arrowstreet Capital, and G2 Investment Partners Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position North Run Capital allocated the biggest weight to Airgain, Inc. (NASDAQ:AIRG), around 2.27% of its 13F portfolio. G2 Investment Partners Management is also relatively very bullish on the stock, earmarking 0.08 percent of its 13F equity portfolio to AIRG.
Because Airgain, Inc. (NASDAQ:AIRG) has witnessed declining sentiment from hedge fund managers, it’s easy to see that there is a sect of fund managers that decided to sell off their full holdings by the end of the third quarter. Intriguingly, Donald Sussman’s Paloma Partners sold off the largest position of the 750 funds watched by Insider Monkey, totaling an estimated $0.2 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund dumped about $0.1 million worth. These moves are interesting, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Airgain, Inc. (NASDAQ:AIRG) but similarly valued. We will take a look at Zovio Inc. (NASDAQ:ZVO), AgroFresh Solutions Inc (NASDAQ:AGFS), MMA Capital Holdings Inc. (NASDAQ:MMAC), Select Bancorp, Inc. (NASDAQ:SLCT), AcelRx Pharmaceuticals Inc (NASDAQ:ACRX), Platinum Group Metals Limited (NYSE:PLG), and Codorus Valley Bancorp, Inc. (NASDAQ:CVLY). All of these stocks’ market caps are closest to AIRG’s market cap.
|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 4.7 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $11 million in AIRG’s case. Zovio Inc. (NASDAQ:ZVO) is the most popular stock in this table. On the other hand AgroFresh Solutions Inc (NASDAQ:AGFS) is the least popular one with only 3 bullish hedge fund positions. Airgain, Inc. (NASDAQ:AIRG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AIRG is 58.7. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and beat the market again by 16 percentage points. Unfortunately AIRG wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on AIRG were disappointed as the stock returned 0.8% since the end of September (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.