The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards A10 Networks Inc (NYSE:ATEN).
Is A10 Networks Inc (NYSE:ATEN) a healthy stock for your portfolio? Prominent investors are becoming hopeful. The number of long hedge fund bets went up by 2 in recent months. Our calculations also showed that ATEN 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 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 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 key hedge fund action surrounding A10 Networks Inc (NYSE:ATEN).
How have hedgies been trading A10 Networks Inc (NYSE:ATEN)?
Heading into the first quarter of 2019, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in ATEN over the last 14 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, VIEX Capital Advisors was the largest shareholder of A10 Networks Inc (NYSE:ATEN), with a stake worth $30.5 million reported as of the end of December. Trailing VIEX Capital Advisors was Divisar Capital, which amassed a stake valued at $15.9 million. Renaissance Technologies, Royce & Associates, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, key money managers were breaking ground themselves. Divisar Capital, managed by Steven Baughman, assembled the largest position in A10 Networks Inc (NYSE:ATEN). Divisar Capital had $15.9 million invested in the company at the end of the quarter. Cynthia Paul's Lynrock Lake also initiated a $1.1 million position during the quarter.
Let's now take a look at hedge fund activity in other stocks similar to A10 Networks Inc (NYSE:ATEN). We will take a look at NuCana plc (NASDAQ:NCNA), Senseonics Holdings, Inc. (NYSE:SENS), Lands' End, Inc. (NASDAQ:LE), and BioScrip Inc. (NASDAQ:BIOS). This group of stocks' market caps match ATEN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NCNA,2,33531,-2 SENS,14,7465,-3 LE,13,89765,-1 BIOS,21,111803,3 Average,12.5,60641,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $84 million in ATEN's case. BioScrip Inc. (NASDAQ:BIOS) is the most popular stock in this table. On the other hand NuCana plc (NASDAQ:NCNA) is the least popular one with only 2 bullish hedge fund positions. A10 Networks Inc (NYSE:ATEN) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately ATEN wasn't nearly as popular as these 15 stock and hedge funds that were betting on ATEN were disappointed as the stock returned 12.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.