Is InterNAP Network Services (INAP) Going To Burn These Hedge Funds ?

We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like InterNAP Network Services (NASDAQ:INAP).

InterNAP Network Services (NASDAQ:INAP) was in 9 hedge funds’ portfolios at the end of the third quarter of 2019. INAP investors should pay attention to an increase in hedge fund sentiment of late. There were 8 hedge funds in our database with INAP positions at the end of the previous quarter. Our calculations also showed that INAP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are tons of gauges stock market investors put to use to value their stock investments. A pair of the most useful gauges are hedge fund and insider trading activity. We have shown that, historically, those who follow the best picks of the elite fund managers can outpace the broader indices by a significant margin (see the details here).

Mario Gabelli

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy  based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We’re going to check out the fresh hedge fund action regarding InterNAP Network Services (NASDAQ:INAP).

Hedge fund activity in InterNAP Network Services (NASDAQ:INAP)

At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in INAP over the last 17 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is INAP A Good Stock To Buy?

The largest stake in InterNAP Network Services (NASDAQ:INAP) was held by GAMCO Investors, which reported holding $8 million worth of stock at the end of September. It was followed by North Run Capital with a $4.9 million position. Other investors bullish on the company included Solas Capital Management, Proxima Capital Management, and Cruiser Capital Advisors. In terms of the portfolio weights assigned to each position North Run Capital allocated the biggest weight to InterNAP Network Services (NASDAQ:INAP), around 3.66% of its 13F portfolio. Solas Capital Management is also relatively very bullish on the stock, earmarking 3.03 percent of its 13F equity portfolio to INAP.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, created the biggest position in InterNAP Network Services (NASDAQ:INAP). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as InterNAP Network Services (NASDAQ:INAP) but similarly valued. These stocks are Newater Technology, Inc. (NASDAQ:NEWA), Blink Charging Co. (NASDAQ:BLNK), Key Tronic Corporation (NASDAQ:KTCC), and Wayside Technology Group, Inc. (NASDAQ:WSTG). All of these stocks’ market caps match INAP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NEWA 1 98 0
BLNK 2 87 0
KTCC 2 1301 1
WSTG 2 4777 0
Average 1.75 1566 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 1.75 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $18 million in INAP’s case. Blink Charging Co. (NASDAQ:BLNK) is the most popular stock in this table. On the other hand Newater Technology, Inc. (NASDAQ:NEWA) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks InterNAP Network Services (NASDAQ:INAP) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately INAP wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on INAP were disappointed as the stock returned -53.5% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.

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