How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding SBA Communications Corporation (NASDAQ:SBAC).
Is SBAC stock a buy or sell? Hedge fund interest in SBA Communications Corporation (NASDAQ:SBAC) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that SBAC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Royalty Pharma Plc (NASDAQ:RPRX), ANSYS, Inc. (NASDAQ:ANSS), and AFLAC Incorporated (NYSE:AFL) to gather more data points.
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 10 best battery stocks to buy to identify the next stock with 10x 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. Keeping this in mind let’s view the new hedge fund action surrounding SBA Communications Corporation (NASDAQ:SBAC).
Do Hedge Funds Think SBAC Is A Good Stock To Buy Now?
At the end of December, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 45 hedge funds held shares or bullish call options in SBAC a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
More specifically, Akre Capital Management was the largest shareholder of SBA Communications Corporation (NASDAQ:SBAC), with a stake worth $695.5 million reported as of the end of December. Trailing Akre Capital Management was D E Shaw, which amassed a stake valued at $206.7 million. Two Sigma Advisors, Skye Global Management, and Arrowstreet Capital 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 Land & Buildings Investment Management allocated the biggest weight to SBA Communications Corporation (NASDAQ:SBAC), around 6.45% of its 13F portfolio. Kettle Hill Capital Management is also relatively very bullish on the stock, dishing out 5.17 percent of its 13F equity portfolio to SBAC.
Judging by the fact that SBA Communications Corporation (NASDAQ:SBAC) has experienced declining sentiment from the smart money, it’s safe to say that there exists a select few funds that slashed their positions entirely heading into Q1. Interestingly, Gabriel Plotkin’s Melvin Capital Management dropped the largest position of the “upper crust” of funds followed by Insider Monkey, totaling close to $95.5 million in stock. Cyrus de Weck’s fund, Portsea Asset Management, also cut its stock, about $30 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks similar to SBA Communications Corporation (NASDAQ:SBAC). These stocks are Royalty Pharma Plc (NASDAQ:RPRX), ANSYS, Inc. (NASDAQ:ANSS), AFLAC Incorporated (NYSE:AFL), Credit Suisse Group AG (NYSE:CS), Kinder Morgan Inc (NYSE:KMI), Prudential Financial Inc (NYSE:PRU), and Hilton Worldwide Holdings Inc (NYSE:HLT). This group of stocks’ market valuations are similar to SBAC’s market valuation.
|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 34.6 hedge funds with bullish positions and the average amount invested in these stocks was $1864 million. That figure was $1762 million in SBAC’s case. Hilton Worldwide Holdings Inc (NYSE:HLT) is the most popular stock in this table. On the other hand Credit Suisse Group AG (NYSE:CS) is the least popular one with only 11 bullish hedge fund positions. SBA Communications Corporation (NASDAQ:SBAC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SBAC is 60.3. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and beat the market again by 0.8 percentage points. Unfortunately SBAC wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on SBAC were disappointed as the stock returned -5.7% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Sba Communications Corp (NASDAQ:SBAC)
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Disclosure: None. This article was originally published at Insider Monkey.