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Is GOGO Stock A Buy Now?

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Reymerlyn Martin
·6 min read
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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Gogo Inc (NASDAQ:GOGO).

Is GOGO stock a buy now? Hedge funds were cutting their exposure. The number of bullish hedge fund positions dropped by 4 in recent months. Gogo Inc (NASDAQ:GOGO) was in 14 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 22. Our calculations also showed that GOGO isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 18 hedge funds in our database with GOGO positions at the end of the second quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

CITADEL INVESTMENT GROUP
CITADEL INVESTMENT GROUP

Ken Griffin of Citadel Investment 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. We go through lists like the 15 best blue chip stocks 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. Keeping this in mind we're going to analyze the latest hedge fund action regarding Gogo Inc (NASDAQ:GOGO).

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

Heading into the fourth quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GOGO over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Gogo Inc (NASDAQ:GOGO) was held by Mudrick Capital Management, which reported holding $80.6 million worth of stock at the end of September. It was followed by Tenzing Global Investors with a $33.7 million position. Other investors bullish on the company included Renaissance Technologies, LMR Partners, and Millennium Management. In terms of the portfolio weights assigned to each position Mudrick Capital Management allocated the biggest weight to Gogo Inc (NASDAQ:GOGO), around 20.88% of its 13F portfolio. Tenzing Global Investors is also relatively very bullish on the stock, designating 15.11 percent of its 13F equity portfolio to GOGO.

Because Gogo Inc (NASDAQ:GOGO) has faced a decline in interest from hedge fund managers, it's safe to say that there exists a select few hedge funds that slashed their positions entirely in the third quarter. It's worth mentioning that Michael M. Rothenberg's Moab Capital Partners dumped the largest investment of all the hedgies monitored by Insider Monkey, worth close to $13.2 million in stock. Doug Silverman and Alexander Klabin's fund, Senator Investment Group, also cut its stock, about $7.1 million worth. These moves are interesting, as total hedge fund interest was cut by 4 funds in the third quarter.

Let's go over hedge fund activity in other stocks similar to Gogo Inc (NASDAQ:GOGO). These stocks are World Acceptance Corp. (NASDAQ:WRLD), PAE Incorporated (NASDAQ:PAE), Douglas Dynamics Inc (NYSE:PLOW), Trean Insurance Group, Inc. (NASDAQ:TIG), Keros Therapeutics, Inc. (NASDAQ:KROS), i3 Verticals, Inc. (NASDAQ:IIIV), and Newmark Group, Inc. (NASDAQ:NMRK). All of these stocks' market caps resemble GOGO's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WRLD,12,137504,0 PAE,17,107936,0 PLOW,7,4584,0 TIG,14,49185,14 KROS,8,214776,-3 IIIV,18,68722,6 NMRK,19,88996,-5 Average,13.6,95958,1.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.6 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $165 million in GOGO's case. Newmark Group, Inc. (NASDAQ:NMRK) is the most popular stock in this table. On the other hand Douglas Dynamics Inc (NYSE:PLOW) is the least popular one with only 7 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. Our overall hedge fund sentiment score for GOGO is 49.3. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on GOGO as the stock returned 32% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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