Is VSAT A Good Stock To Buy According To Hedge Funds?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is ViaSat, Inc. (NASDAQ:VSAT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is VSAT a good stock to buy? ViaSat, Inc. (NASDAQ:VSAT) investors should be aware of an increase in activity from the world’s largest hedge funds lately. ViaSat, Inc. (NASDAQ:VSAT) was in 30 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that VSAT 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 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.

Jeffrey Bronchick - Cove Street Capital

Jeffrey Bronchick of Cove Street Capital

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 new hedge fund action surrounding ViaSat, Inc. (NASDAQ:VSAT).

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

At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in VSAT over the last 21 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Baupost Group was the largest shareholder of ViaSat, Inc. (NASDAQ:VSAT), with a stake worth $560.2 million reported as of the end of September. Trailing Baupost Group was FPR Partners, which amassed a stake valued at $229.8 million. Cove Street Capital, Two Sigma Advisors, and D E Shaw 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 FPR Partners allocated the biggest weight to ViaSat, Inc. (NASDAQ:VSAT), around 7.9% of its 13F portfolio. Mountain Lake Investment Management is also relatively very bullish on the stock, designating 6.88 percent of its 13F equity portfolio to VSAT.

As aggregate interest increased, some big names were breaking ground themselves. Hi-Line Capital Management, managed by Michael Anderson, initiated the largest position in ViaSat, Inc. (NASDAQ:VSAT). Hi-Line Capital Management had $3.8 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also initiated a $1.6 million position during the quarter. The other funds with new positions in the stock are Benjamin A. Smith’s Laurion Capital Management, Minhua Zhang’s Weld Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as ViaSat, Inc. (NASDAQ:VSAT) but similarly valued. These stocks are Cushman & Wakefield plc (NYSE:CWK), Avista Corp (NYSE:AVA), Fabrinet (NYSE:FN), Trinity Industries, Inc. (NYSE:TRN), Nelnet, Inc. (NYSE:NNI), Wintrust Financial Corporation (NASDAQ:WTFC), and Revolution Medicines, Inc. (NASDAQ:RVMD). This group of stocks’ market values resemble VSAT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CWK 12 87064 -5
AVA 20 74564 -1
FN 17 74880 -6
TRN 23 766000 -2
NNI 13 133382 1
WTFC 20 113331 -3
RVMD 15 371222 2
Average 17.1 231492 -2

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.1 hedge funds with bullish positions and the average amount invested in these stocks was $231 million. That figure was $908 million in VSAT’s case. Trinity Industries, Inc. (NYSE:TRN) is the most popular stock in this table. On the other hand Cushman & Wakefield plc (NYSE:CWK) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks ViaSat, Inc. (NASDAQ:VSAT) is more popular among hedge funds. Our overall hedge fund sentiment score for VSAT 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 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Unfortunately VSAT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on VSAT were disappointed as the stock returned -8.7% since the end of the third quarter (through 12/18) 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.

Follow Viasat Inc (NASDAQ:VSAT)

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