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Vonage Holdings Corp. (VG): Are Hedge Funds Right About This Stock?

“Market volatility has picked up again over the past few weeks. Headlines highlight risks regarding interest rates, the Fed, China, house prices, auto sales, trade wars, and more. Uncertainty abounds. But doesn’t it always? I have no view on whether the recent volatility will continue for a while, or whether the market will be back at all-time highs before we know it. I remain focused on preserving and growing our capital, and continue to believe that the best way to do so is via a value-driven, concentrated, patient approach. I shun consensus holdings, rich valuations, and market fads, in favor of solid, yet frequently off-the-beaten-path, businesses run by excellent, aligned management teams, purchased at deep discounts to intrinsic value,” are the words of Maran Capital’s Dan Roller. His stock picks have been beating the S&P 500 Index handily. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards Vonage Holdings Corp. (NYSE:VG) and see how it was affected.

Is Vonage Holdings Corp. (NYSE:VG) an outstanding stock to buy now? Hedge funds are getting more optimistic. The number of long hedge fund positions improved by 7 in recent months. Our calculations also showed that vg isn’t among the 30 most popular stocks among hedge funds.

To the average investor there are plenty of gauges investors have at their disposal to analyze their holdings. A pair of the most underrated gauges are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce their index-focused peers by a significant margin (see the details here).

MILLENNIUM MANAGEMENT

We’re going to take a look at the key hedge fund action regarding Vonage Holdings Corp. (NYSE:VG).

How are hedge funds trading Vonage Holdings Corp. (NYSE:VG)?

At the end of the third quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 37% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards VG over the last 13 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

No of Hedge Funds with VG Positions

More specifically, Southpoint Capital Advisors was the largest shareholder of Vonage Holdings Corp. (NYSE:VG), with a stake worth $49.6 million reported as of the end of September. Trailing Southpoint Capital Advisors was Legion Partners Asset Management, which amassed a stake valued at $33.5 million. Renaissance Technologies, Marshall Wace LLP, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.

As industrywide interest jumped, specific money managers were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the biggest position in Vonage Holdings Corp. (NYSE:VG). Arrowstreet Capital had $8.6 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser’s Magnetar Capital also made a $0.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Matthew Tewksbury’s Stevens Capital Management, Mike Vranos’s Ellington, and Jeffrey Talpins’s Element Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Vonage Holdings Corp. (NYSE:VG). We will take a look at The Boston Beer Company Inc (NYSE:SAM), Kinross Gold Corporation (NYSE:KGC), MorphoSys AG (NASDAQ:MOR), and Apergy Corporation (NYSE:APY). This group of stocks’ market values are similar to VG’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SAM 14 264305 0
KGC 18 267341 -3
MOR 5 56300 -2
APY 20 182150 8
Average 14.25 192524 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $193 million. That figure was $195 million in VG’s case. Apergy Corporation (NYSE:APY) is the most popular stock in this table. On the other hand MorphoSys AG (NASDAQ:MOR) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Vonage Holdings Corp. (NYSE:VG) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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