As we already know from media reports and hedge fund investor letters, many hedge funds lost money in fourth quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with technology among them. Nevertheless, most investors decided to stick to their bullish theses and recouped their losses by the end of the first quarter. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Gogo Inc (NASDAQ:GOGO).
Gogo Inc (NASDAQ:GOGO) was in 12 hedge funds' portfolios at the end of March. GOGO has experienced an increase in activity from the world's largest hedge funds lately. There were 11 hedge funds in our database with GOGO holdings at the end of the previous quarter. Our calculations also showed that gogo isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a look at the fresh hedge fund action encompassing Gogo Inc (NASDAQ:GOGO).
How have hedgies been trading Gogo Inc (NASDAQ:GOGO)?
At the end of the first quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in GOGO a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
More specifically, Stelliam Investment Management was the largest shareholder of Gogo Inc (NASDAQ:GOGO), with a stake worth $30.4 million reported as of the end of March. Trailing Stelliam Investment Management was Valinor Management, which amassed a stake valued at $14.5 million. North Peak Capital, GAMCO Investors, and Tenzing Global Investors were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, key money managers were breaking ground themselves. Tenzing Global Investors, managed by Chet Kapoor, assembled the most outsized position in Gogo Inc (NASDAQ:GOGO). Tenzing Global Investors had $5.4 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also made a $2.3 million investment in the stock during the quarter. The following funds were also among the new GOGO investors: Glenn Russell Dubin's Highbridge Capital Management, Glenn Russell Dubin's Highbridge Capital Management, and Israel Englander's Millennium Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Gogo Inc (NASDAQ:GOGO) but similarly valued. These stocks are CryoPort, Inc. (NASDAQ:CYRX), Village Super Market, Inc. (NASDAQ:VLGEA), Hawkins, Inc. (NASDAQ:HWKN), and Tailored Brands, Inc. (NYSE:TLRD). This group of stocks' market caps match GOGO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CYRX,7,6423,3 VLGEA,8,49382,0 HWKN,6,7279,-3 TLRD,18,53895,0 Average,9.75,29245,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $77 million in GOGO's case. Tailored Brands, Inc. (NYSE:TLRD) is the most popular stock in this table. On the other hand Hawkins, Inc. (NASDAQ:HWKN) is the least popular one with only 6 bullish hedge fund positions. Gogo Inc (NASDAQ:GOGO) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately GOGO wasn't nearly as popular as these 20 stocks and hedge funds that were betting on GOGO were disappointed as the stock returned 2% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.