Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of 8x8, Inc. (NASDAQ:EGHT) based on that data and determine whether they were really smart about the stock.
Is 8x8, Inc. (NASDAQ:EGHT) going to take off soon? Hedge funds were in an optimistic mood. The number of long hedge fund positions rose by 1 lately. 8x8, Inc. (NASDAQ:EGHT) was in 21 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 25. Our calculations also showed that EGHT isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
Today there are plenty of gauges market participants have at their disposal to assess stocks. Some of the most under-the-radar gauges are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outpace the market by a significant margin (see the details here).
David Atterbury of Whetstone Capital Advisors
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 precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. Now let's review the key hedge fund action encompassing 8x8, Inc. (NASDAQ:EGHT).
How have hedgies been trading 8x8, Inc. (NASDAQ:EGHT)?
Heading into the third quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EGHT over the last 20 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Sylebra Capital Management held the most valuable stake in 8x8, Inc. (NASDAQ:EGHT), which was worth $190.8 million at the end of the third quarter. On the second spot was Tiger Global Management LLC which amassed $79.2 million worth of shares. Bloom Tree Partners, Citadel Investment Group, and SRS Investment Management 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 Bloom Tree Partners allocated the biggest weight to 8x8, Inc. (NASDAQ:EGHT), around 5.99% of its 13F portfolio. Sylebra Capital Management is also relatively very bullish on the stock, dishing out 5.95 percent of its 13F equity portfolio to EGHT.
Consequently, key hedge funds have been driving this bullishness. Whetstone Capital Advisors, managed by David Atterbury, initiated the largest position in 8x8, Inc. (NASDAQ:EGHT). Whetstone Capital Advisors had $8.8 million invested in the company at the end of the quarter. Constantinos J. Christofilis's Archon Capital Management also initiated a $6.4 million position during the quarter. The other funds with brand new EGHT positions are Matthew Hulsizer's PEAK6 Capital Management, Peter Muller's PDT Partners, and Philip Hempleman's Ardsley Partners.
Let's now review hedge fund activity in other stocks similar to 8x8, Inc. (NASDAQ:EGHT). These stocks are Onto Innovation Inc. (NYSE:ONTO), Compass Minerals International, Inc. (NYSE:CMP), Osisko Gold Royalties Ltd (NYSE:OR), Callaway Golf Company (NYSE:ELY), Big Lots, Inc. (NYSE:BIG), Zymeworks Inc. (NYSE:ZYME), and CareTrust REIT Inc (NASDAQ:CTRE). This group of stocks' market values are similar to EGHT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ONTO,17,161796,6 CMP,18,62058,2 OR,15,143014,2 ELY,24,277158,1 BIG,22,247501,7 ZYME,31,601363,4 CTRE,19,57146,12 Average,20.9,221434,4.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.9 hedge funds with bullish positions and the average amount invested in these stocks was $221 million. That figure was $418 million in EGHT's case. Zymeworks Inc. (NYSE:ZYME) is the most popular stock in this table. On the other hand Osisko Gold Royalties Ltd (NYSE:OR) is the least popular one with only 15 bullish hedge fund positions. 8x8, Inc. (NASDAQ:EGHT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EGHT is 50. 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. 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 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 24.8% in 2020 through the end of September and beat the market by 19.3 percentage points. Unfortunately EGHT wasn't nearly as popular as these 10 stocks and hedge funds that were betting on EGHT were disappointed as the stock returned -2.8% in Q3 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.