In this article we will check out the progression of hedge fund sentiment towards Digital Turbine Inc (NASDAQ:APPS) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Digital Turbine Inc (NASDAQ:APPS) investors should pay attention to an increase in support from the world's most elite money managers recently. APPS was in 22 hedge funds' portfolios at the end of March. There were 20 hedge funds in our database with APPS positions at the end of the previous quarter. Our calculations also showed that APPS 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.
According to most traders, hedge funds are assumed to be underperforming, old investment vehicles of the past. While there are more than 8000 funds with their doors open at present, We choose to focus on the moguls of this group, approximately 850 funds. These hedge fund managers oversee most of the hedge fund industry's total asset base, and by keeping an eye on their best equity investments, Insider Monkey has discovered numerous investment strategies that have historically outperformed Mr. Market. Insider Monkey's flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_745225" align="aligncenter" width="395"] Noam Gottesman of GLG Partners[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's take a peek at the fresh hedge fund action regarding Digital Turbine Inc (NASDAQ:APPS).
How have hedgies been trading Digital Turbine Inc (NASDAQ:APPS)?
At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the fourth quarter of 2019. On the other hand, there were a total of 15 hedge funds with a bullish position in APPS a year ago. With hedgies' sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Greenhaven Road Investment Management held the most valuable stake in Digital Turbine Inc (NASDAQ:APPS), which was worth $11.2 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $5.4 million worth of shares. MAK Capital One, GLG Partners, 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 Greenhaven Road Investment Management allocated the biggest weight to Digital Turbine Inc (NASDAQ:APPS), around 14.09% of its 13F portfolio. Trellus Management Company is also relatively very bullish on the stock, dishing out 4.47 percent of its 13F equity portfolio to APPS.
As aggregate interest increased, specific money managers were breaking ground themselves. MAK Capital One, managed by Michael Kaufman, assembled the largest position in Digital Turbine Inc (NASDAQ:APPS). MAK Capital One had $4.8 million invested in the company at the end of the quarter. Adam Usdan's Trellus Management Company also made a $2.5 million investment in the stock during the quarter. The following funds were also among the new APPS investors: Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, Greg Eisner's Engineers Gate Manager, and Jonathan Soros's JS Capital.
Let's also examine hedge fund activity in other stocks similar to Digital Turbine Inc (NASDAQ:APPS). These stocks are America's Car-Mart, Inc. (NASDAQ:CRMT), Puxin Limited (NYSE:NEW), Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS), and Boot Barn Holdings Inc (NYSE:BOOT). This group of stocks' market values are closest to APPS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CRMT,10,30233,-11 NEW,8,5758,0 VLRS,9,33933,-2 BOOT,20,31760,-8 Average,11.75,25421,-5.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $50 million in APPS's case. Boot Barn Holdings Inc (NYSE:BOOT) is the most popular stock in this table. On the other hand Puxin Limited (NYSE:NEW) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Digital Turbine Inc (NASDAQ:APPS) is more popular among hedge funds. 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 returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on APPS as the stock returned 120.4% so far in Q2 (through June 10th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.