Is BOX A Good Stock To Buy Now?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Box, Inc. (NYSE:BOX) based on those filings.

Is BOX a good stock to buy now? Box, Inc. (NYSE:BOX) was in 41 hedge funds’ portfolios at the end of September. The all time high for this statistic is 35. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. BOX investors should pay attention to an increase in hedge fund interest lately. There were 33 hedge funds in our database with BOX holdings at the end of June. Our calculations also showed that BOX 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.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 66 percentage points since March 2017 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Jeff Smith

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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. Now we’re going to take a look at the fresh hedge fund action encompassing Box, Inc. (NYSE:BOX).

Do Hedge Funds Think BOX Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 41 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 24% from one quarter earlier. On the other hand, there were a total of 33 hedge funds with a bullish position in BOX a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is BOX A Good Stock To Buy?

More specifically, Starboard Value LP was the largest shareholder of Box, Inc. (NYSE:BOX), with a stake worth $161.2 million reported as of the end of September. Trailing Starboard Value LP was RGM Capital, which amassed a stake valued at $114.1 million. Renaissance Technologies, Arrowstreet Capital, and Two Sigma Advisors 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 RGM Capital allocated the biggest weight to Box, Inc. (NYSE:BOX), around 6.41% of its 13F portfolio. Divisar Capital is also relatively very bullish on the stock, designating 5.31 percent of its 13F equity portfolio to BOX.

Consequently, some big names were leading the bulls’ herd. Brightlight Capital, managed by Vadim Rubinchik, established the biggest position in Box, Inc. (NYSE:BOX). Brightlight Capital had $7.9 million invested in the company at the end of the quarter. Andrew Kurita’s Kettle Hill Capital Management also initiated a $2.1 million position during the quarter. The other funds with new positions in the stock are Jinghua Yan’s TwinBeech Capital, Brandon Haley’s Holocene Advisors, and Steve Cohen’s Point72 Asset Management.

Let’s check out hedge fund activity in other stocks similar to Box, Inc. (NYSE:BOX). We will take a look at Franklin Electric Co. (NASDAQ:FELE), Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL), Capri Holdings Limited (NYSE:CPRI), Holdings Inc (NASDAQ:ALRM), Amkor Technology, Inc. (NASDAQ:AMKR), Casella Waste Systems Inc. (NASDAQ:CWST), and Green Dot Corporation (NYSE:GDOT). This group of stocks’ market valuations are similar to BOX’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FELE 19 229763 4
CBRL 29 216139 7
CPRI 36 426536 8
ALRM 24 215299 0
AMKR 27 98077 4
CWST 17 145606 1
GDOT 28 539024 5
Average 25.7 267206 4.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.7 hedge funds with bullish positions and the average amount invested in these stocks was $267 million. That figure was $582 million in BOX’s case. Capri Holdings Limited (NYSE:CPRI) is the most popular stock in this table. On the other hand Casella Waste Systems Inc. (NASDAQ:CWST) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Box, Inc. (NYSE:BOX) is more popular among hedge funds. Our overall hedge fund sentiment score for BOX is 90. 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. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Unfortunately BOX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on BOX were disappointed as the stock returned 3.1% since the end of the third quarter (through 12/14) 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 most of these stocks already outperformed the market in 2020.

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