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8×8, Inc. (EGHT): Hedge Funds Taking Some Cash Off The Table

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Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards 8x8, Inc. (NYSE:EGHT).

8x8, Inc. (NYSE:EGHT) has experienced a decrease in support from the world's most elite money managers lately. 8x8, Inc. (NYSE:EGHT) was in 24 hedge funds' portfolios at the end of March. The all time high for this statistic is 26. There were 26 hedge funds in our database with EGHT holdings at the end of December. Our calculations also showed that EGHT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In today’s marketplace there are tons of signals stock market investors put to use to size up publicly traded companies. Two of the most innovative signals are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can outperform the S&P 500 by a superb margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Ryan Frick Dorsal Capital
Ryan Frick Dorsal Capital

Ryan Frick of Dorsal Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind let's view the new hedge fund action encompassing 8x8, Inc. (NYSE:EGHT).

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

At the end of March, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the fourth quarter of 2020. On the other hand, there were a total of 20 hedge funds with a bullish position in EGHT a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Sylebra Capital Management held the most valuable stake in 8x8, Inc. (NYSE:EGHT), which was worth $413.7 million at the end of the fourth quarter. On the second spot was Tiger Global Management LLC which amassed $292 million worth of shares. King Street Capital, Dorsal Capital Management, and Citadel Investment Group 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 Sylebra Capital Management allocated the biggest weight to 8x8, Inc. (NYSE:EGHT), around 10.69% of its 13F portfolio. Stamina Capital Management is also relatively very bullish on the stock, dishing out 5.77 percent of its 13F equity portfolio to EGHT.

Seeing as 8x8, Inc. (NYSE:EGHT) has faced a decline in interest from the smart money, logic holds that there exists a select few fund managers that elected to cut their full holdings heading into Q2. At the top of the heap, Alex Sacerdote's Whale Rock Capital Management dropped the biggest position of the 750 funds tracked by Insider Monkey, totaling about $130.3 million in stock, and Richard Gerson and Navroz D. Udwadia's Falcon Edge Capital was right behind this move, as the fund dumped about $40.9 million worth. These moves are interesting, as total hedge fund interest dropped by 2 funds heading into Q2.

Let's go over hedge fund activity in other stocks similar to 8x8, Inc. (NYSE:EGHT). We will take a look at Vishay Intertechnology, Inc. (NYSE:VSH), EPR Properties (NYSE:EPR), Sanderson Farms, Inc. (NASDAQ:SAFM), AMN Healthcare Services Inc (NYSE:AMN), TechnipFMC plc (NYSE:FTI), Rush Street Interactive, Inc. (NYSE:RSI), and LiveRamp Holdings, Inc. (NYSE:RAMP). This group of stocks' market valuations are closest to EGHT's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VSH,32,565142,1 EPR,15,345162,0 SAFM,18,177554,-1 AMN,19,82099,6 FTI,25,409812,-10 RSI,17,116342,-9 RAMP,26,300365,2 Average,21.7,285211,-1.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $285 million. That figure was $1007 million in EGHT's case. Vishay Intertechnology, Inc. (NYSE:VSH) is the most popular stock in this table. On the other hand EPR Properties (NYSE:EPR) is the least popular one with only 15 bullish hedge fund positions. 8x8, Inc. (NYSE:EGHT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EGHT is 57.2. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately EGHT wasn't nearly as popular as these 5 stocks and hedge funds that were betting on EGHT were disappointed as the stock returned -22.5% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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