Is EGHT 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 8×8, Inc. (NASDAQ:EGHT) based on those filings.

Is EGHT a good stock to buy now? Investors who are in the know were taking an optimistic view. The number of bullish hedge fund bets advanced by 1 recently. 8×8, Inc. (NASDAQ:EGHT) was in 22 hedge funds’ portfolios at the end of September. The all time high for this statistic is 25. Our calculations also showed that EGHT 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.

According to most investors, hedge funds are assumed to be worthless, old financial vehicles of the past. While there are more than 8000 funds trading at present, Our experts choose to focus on the leaders of this group, approximately 850 funds. These investment experts oversee the lion’s share of the smart money’s total asset base, and by keeping an eye on their first-class investments, Insider Monkey has revealed numerous investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Chase Coleman Tiger Global Management

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 15 best blue chip stocks 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 recent hedge fund action regarding 8×8, Inc. (NASDAQ:EGHT).

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

At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards EGHT over the last 21 quarters. 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 EGHT A Good Stock To Buy?

More specifically, Sylebra Capital Management was the largest shareholder of 8×8, Inc. (NASDAQ:EGHT), with a stake worth $207.3 million reported as of the end of September. Trailing Sylebra Capital Management was Tiger Global Management LLC, which amassed a stake valued at $77 million. Bloom Tree Partners, Whetstone Capital Advisors, and Millennium 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 Sylebra Capital Management allocated the biggest weight to 8×8, Inc. (NASDAQ:EGHT), around 6.37% of its 13F portfolio. Bloom Tree Partners is also relatively very bullish on the stock, dishing out 5.07 percent of its 13F equity portfolio to EGHT.

As industrywide interest jumped, key money managers were leading the bulls’ herd. Algert Global, managed by Peter Algert, assembled the biggest position in 8×8, Inc. (NASDAQ:EGHT). Algert Global had $1.9 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $1.5 million investment in the stock during the quarter. The other funds with new positions in the stock are George Soros’s Soros Fund Management, Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, and Mika Toikka’s AlphaCrest Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as 8×8, Inc. (NASDAQ:EGHT) but similarly valued. These stocks are United States Steel Corporation (NYSE:X), Group 1 Automotive, Inc. (NYSE:GPI), Hostess Brands, Inc. (NASDAQ:TWNK), Rent-A-Center Inc (NASDAQ:RCII), Noah Holdings Limited (NYSE:NOAH), 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), and Forward Air Corporation (NASDAQ:FWRD). This group of stocks’ market values match EGHT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
X 21 71985 1
GPI 24 214897 3
TWNK 30 204785 6
RCII 25 321966 6
NOAH 16 342412 -2
FLWS 23 144100 0
FWRD 15 118716 0
Average 22 202694 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $203 million. That figure was $384 million in EGHT’s case. Hostess Brands, Inc. (NASDAQ:TWNK) is the most popular stock in this table. On the other hand Forward Air Corporation (NASDAQ:FWRD) is the least popular one with only 15 bullish hedge fund positions. 8×8, Inc. (NASDAQ:EGHT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EGHT is 55.7. 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. 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. A small number of hedge funds were also right about betting on EGHT as the stock returned 94.4% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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