A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Zagg Inc (NASDAQ:ZAGG).
Is ZAGG a good stock to buy now? Zagg Inc (NASDAQ:ZAGG) has seen a decrease in hedge fund interest lately. Zagg Inc (NASDAQ:ZAGG) was in 10 hedge funds’ portfolios at the end of September. The all time high for this statistics is 19. There were 12 hedge funds in our database with ZAGG positions at the end of the second quarter. Our calculations also showed that ZAGG 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 was 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 let’s review the recent hedge fund action regarding Zagg Inc (NASDAQ:ZAGG).
Do Hedge Funds Think ZAGG Is A Good Stock To Buy Now?
At third quarter’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ZAGG over the last 21 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
More specifically, AREX Capital Management was the largest shareholder of Zagg Inc (NASDAQ:ZAGG), with a stake worth $6.4 million reported as of the end of September. Trailing AREX Capital Management was Ariel Investments, which amassed a stake valued at $2.2 million. Arrowstreet Capital, Ancora 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 AREX Capital Management allocated the biggest weight to Zagg Inc (NASDAQ:ZAGG), around 4.1% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to ZAGG.
Because Zagg Inc (NASDAQ:ZAGG) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of hedge funds that elected to cut their entire stakes in the third quarter. At the top of the heap, Jim Roumell’s Roumell Asset Management dropped the biggest investment of the “upper crust” of funds monitored by Insider Monkey, comprising an estimated $2.4 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also dropped its stock, about $0.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 2 funds in the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Zagg Inc (NASDAQ:ZAGG) but similarly valued. These stocks are Orion Group Holdings, Inc. (NYSE:ORN), Severn Bancorp Inc (NASDAQ:SVBI), S&W Seed Company (NASDAQ:SANW), USA Truck, Inc. (NASDAQ:USAK), Pixelworks, Inc. (NASDAQ:PXLW), Manitex International, Inc. (NASDAQ:MNTX), and American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT). All of these stocks’ market caps are closest to ZAGG’s market cap.
|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 6.4 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $12 million in ZAGG’s case. Orion Group Holdings, Inc. (NYSE:ORN) is the most popular stock in this table. On the other hand American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT) is the least popular one with only 2 bullish hedge fund positions. Zagg Inc (NASDAQ:ZAGG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ZAGG is 68.8. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on ZAGG as the stock returned 42.9% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.