Is BAND Stock A Buy or Sell?
With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was Bandwidth Inc. (NASDAQ:BAND).
Is BAND stock a buy? Hedge funds were becoming more confident. The number of bullish hedge fund bets increased by 1 lately. Bandwidth Inc. (NASDAQ:BAND) was in 31 hedge funds' portfolios at the end of December. The all time high for this statistic is 33. Our calculations also showed that BAND isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 30 hedge funds in our database with BAND holdings at the end of September.
In the 21st century investor’s toolkit there are several metrics investors use to grade publicly traded companies. Two of the best metrics are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can outclass the broader indices by a superb margin (see the details here).
Richard Driehaus of Driehaus Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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. Keeping this in mind let's take a look at the new hedge fund action encompassing Bandwidth Inc. (NASDAQ:BAND).
Do Hedge Funds Think BAND Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the third quarter of 2020. By comparison, 18 hedge funds held shares or bullish call options in BAND a year ago. With hedgies' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds, Point72 Asset Management held the most valuable stake in Bandwidth Inc. (NASDAQ:BAND), which was worth $49.7 million at the end of the fourth quarter. On the second spot was Alta Park Capital which amassed $39.8 million worth of shares. Driehaus Capital, Royce & Associates, and Vista Equity Partners 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 Alta Park Capital allocated the biggest weight to Bandwidth Inc. (NASDAQ:BAND), around 3.35% of its 13F portfolio. Boardman Bay Capital Management is also relatively very bullish on the stock, earmarking 2.81 percent of its 13F equity portfolio to BAND.
As one would reasonably expect, key money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the largest position in Bandwidth Inc. (NASDAQ:BAND). Arrowstreet Capital had $14.9 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser's Magnetar Capital also made a $2.1 million investment in the stock during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel's Two Sigma Advisors, Dmitry Balyasny's Balyasny Asset Management, and Matthew Hulsizer's PEAK6 Capital Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Bandwidth Inc. (NASDAQ:BAND) but similarly valued. These stocks are Valmont Industries, Inc. (NYSE:VMI), Advanced Energy Industries, Inc. (NASDAQ:AEIS), Gates Industrial Corporation plc (NYSE:GTES), Physicians Realty Trust (NYSE:DOC), United States Steel Corporation (NYSE:X), Grocery Outlet Holding Corp. (NASDAQ:GO), and Agree Realty Corporation (NYSE:ADC). This group of stocks' market valuations resemble BAND's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VMI,26,392471,0 AEIS,22,120695,1 GTES,14,42276,0 DOC,15,98474,1 X,37,350306,16 GO,17,64145,-1 ADC,16,242520,0 Average,21,187270,2.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $187 million. That figure was $314 million in BAND's case. United States Steel Corporation (NYSE:X) is the most popular stock in this table. On the other hand Gates Industrial Corporation plc (NYSE:GTES) is the least popular one with only 14 bullish hedge fund positions. Bandwidth Inc. (NASDAQ:BAND) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for BAND is 71.1. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and beat the market again by 1.5 percentage points. Unfortunately BAND wasn't nearly as popular as these 30 stocks and hedge funds that were betting on BAND were disappointed as the stock returned -17.2% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Get real-time email alerts: Follow Bandwidth Inc. (NASDAQ:BAND)
Disclosure: None. This article was originally published at Insider Monkey.
Follow Insider Monkey on Twitter
Related Content
