In this article you are going to find out whether hedge funds think Boingo Wireless Inc (NASDAQ:WIFI) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Boingo Wireless Inc (NASDAQ:WIFI) a splendid investment today? Investors who are in the know are in an optimistic mood. The number of bullish hedge fund bets increased by 4 in recent months. Our calculations also showed that WIFI isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_673876" align="aligncenter" width="400"] John Overdeck of Two Sigma Advisors[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to view the fresh hedge fund action surrounding Boingo Wireless Inc (NASDAQ:WIFI).
What have hedge funds been doing with Boingo Wireless Inc (NASDAQ:WIFI)?
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WIFI over the last 18 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
The largest stake in Boingo Wireless Inc (NASDAQ:WIFI) was held by Lynrock Lake, which reported holding $78.2 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $27.2 million position. Other investors bullish on the company included Headlands Capital, Legion Partners Asset Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Headlands Capital allocated the biggest weight to Boingo Wireless Inc (NASDAQ:WIFI), around 15.4% of its 13F portfolio. Lynrock Lake is also relatively very bullish on the stock, dishing out 7.71 percent of its 13F equity portfolio to WIFI.
As one would reasonably expect, specific money managers were leading the bulls' herd. Lynrock Lake, managed by Cynthia Paul, initiated the most valuable position in Boingo Wireless Inc (NASDAQ:WIFI). Lynrock Lake had $78.2 million invested in the company at the end of the quarter. Ted White and Christopher Kiper's Legion Partners Asset Management also made a $13 million investment in the stock during the quarter. The other funds with new positions in the stock are George McCabe's Portolan Capital Management, Dmitry Balyasny's Balyasny Asset Management, and Adam Usdan's Trellus Management Company.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Boingo Wireless Inc (NASDAQ:WIFI) but similarly valued. These stocks are Dorian LPG Ltd (NYSE:LPG), Winmark Corporation (NASDAQ:WINA), Veeco Instruments Inc. (NASDAQ:VECO), and Textainer Group Holdings Limited (NYSE:TGH). This group of stocks' market caps are similar to WIFI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LPG,17,107158,-5 WINA,11,76758,-1 VECO,14,238257,-1 TGH,11,14043,-2 Average,13.25,109054,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $109 million. That figure was $150 million in WIFI's case. Dorian LPG Ltd (NYSE:LPG) is the most popular stock in this table. On the other hand Winmark Corporation (NASDAQ:WINA) is the least popular one with only 11 bullish hedge fund positions. Boingo Wireless Inc (NASDAQ:WIFI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on WIFI, though not to the same extent, as the stock returned 23.8% during the first two months and twenty five days of the second quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.