Should I Buy ViaSat, Inc. (VSAT)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards ViaSat, Inc. (NASDAQ:VSAT) and determine whether hedge funds skillfully traded this stock.

Is ViaSat, Inc. (NASDAQ:VSAT) ready to rally soon? Prominent investors were getting more optimistic. The number of long hedge fund positions advanced by 2 lately. ViaSat, Inc. (NASDAQ:VSAT) was in 23 hedge funds’ portfolios at the end of June. The all time high for this statistics is 30. Our calculations also showed that VSAT isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

In the eyes of most traders, hedge funds are perceived as unimportant, old investment tools of the past. While there are greater than 8000 funds trading at present, Our experts choose to focus on the masters of this group, approximately 850 funds. It is estimated that this group of investors oversee most of the smart money’s total asset base, and by following their first-class stock picks, Insider Monkey has unsheathed many investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated 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 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .


Seth Klarman of Baupost Group

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 after its stock price crashed. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. Now let’s view the latest hedge fund action regarding ViaSat, Inc. (NASDAQ:VSAT).

How are hedge funds trading ViaSat, Inc. (NASDAQ:VSAT)?

At second quarter’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the previous quarter. On the other hand, there were a total of 28 hedge funds with a bullish position in VSAT a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Baupost Group, managed by Seth Klarman, holds the biggest position in ViaSat, Inc. (NASDAQ:VSAT). Baupost Group has a $526.9 million position in the stock, comprising 6.6% of its 13F portfolio. Coming in second is FPR Partners, managed by Bob Peck and Andy Raab, which holds a $240.6 million position; the fund has 8.4% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions comprise Mason Hawkins’s Southeastern Asset Management, Crispin Odey’s Odey Asset Management Group and Jeffrey Bronchick’s Cove Street Capital. In terms of the portfolio weights assigned to each position Odey Asset Management Group allocated the biggest weight to ViaSat, Inc. (NASDAQ:VSAT), around 10.26% of its 13F portfolio. FPR Partners is also relatively very bullish on the stock, designating 8.37 percent of its 13F equity portfolio to VSAT.

As one would reasonably expect, key money managers were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most outsized position in ViaSat, Inc. (NASDAQ:VSAT). Arrowstreet Capital had $4.6 million invested in the company at the end of the quarter. Michael Price’s MFP Investors also initiated a $1.1 million position during the quarter. The following funds were also among the new VSAT investors: Dmitry Balyasny’s Balyasny Asset Management and Michael Gelband’s ExodusPoint Capital.

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 Kennametal Inc. (NYSE:KMT), SailPoint Technologies Holdings, Inc. (NYSE:SAIL), Fiverr International Ltd. (NYSE:FVRR), Sunrun Inc (NASDAQ:RUN), DCP Midstream LP (NYSE:DCP), SINA Corp (NASDAQ:SINA), and Umpqua Holdings Corp (NASDAQ:UMPQ). This group of stocks’ market values match VSAT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KMT 10 197490 -7
SAIL 21 491091 0
FVRR 21 184813 8
RUN 21 682771 -3
DCP 2 3369 -2
SINA 16 103843 3
UMPQ 24 151735 1
Average 16.4 259302 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.4 hedge funds with bullish positions and the average amount invested in these stocks was $259 million. That figure was $1007 million in VSAT’s case. Umpqua Holdings Corp (NASDAQ:UMPQ) is the most popular stock in this table. On the other hand DCP Midstream LP (NYSE:DCP) is the least popular one with only 2 bullish hedge fund positions. ViaSat, Inc. (NASDAQ:VSAT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for VSAT is 77.7. 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. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately VSAT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on VSAT were disappointed as the stock returned -10.4% in Q3 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

Follow Viasat Inc (NASDAQ:VSAT)

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