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Hedge Funds Are Piling Into 8×8, Inc. (EGHT)

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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 6 years and analyze what the smart money thinks of 8x8, Inc. (NYSE:EGHT) based on that data.

8x8, Inc. (NYSE:EGHT) has experienced an increase in enthusiasm from smart money in recent months. 8x8, Inc. (NYSE:EGHT) was in 29 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 26. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 24 hedge funds in our database with EGHT holdings at the end of March. Our calculations also showed that EGHT isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ryan Frick Dorsal Capital
Ryan Frick Dorsal Capital

Ryan Frick of Dorsal Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let's take a peek at the fresh hedge fund action surrounding 8x8, Inc. (NYSE:EGHT).

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

At the end of the second quarter, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 21% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EGHT over the last 24 quarters. So, let's review 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. (NYSE:EGHT), which was worth $344.3 million at the end of the second quarter. On the second spot was Tiger Global Management LLC which amassed $249.8 million worth of shares. King Street Capital, Dorsal Capital Management, and Stamina Capital 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 Sylebra Capital Management allocated the biggest weight to 8x8, Inc. (NYSE:EGHT), around 8.54% of its 13F portfolio. King Street Capital is also relatively very bullish on the stock, designating 5.47 percent of its 13F equity portfolio to EGHT.

Now, key hedge funds have jumped into 8x8, Inc. (NYSE:EGHT) headfirst. Stamina Capital Management, managed by Christopher Weldon, established the biggest call position in 8x8, Inc. (NYSE:EGHT). Stamina Capital Management had $34.9 million invested in the company at the end of the quarter. Constantinos J. Christofilis's Archon Capital Management also made a $21 million investment in the stock during the quarter. The other funds with brand new EGHT positions are Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and Matthew Hulsizer's PEAK6 Capital Management.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as 8x8, Inc. (NYSE:EGHT) but similarly valued. We will take a look at NorthWestern Corporation (NASDAQ:NWE), Azul S.A. (NYSE:AZUL), American Well Corporation (NYSE:AMWL), Werner Enterprises, Inc. (NASDAQ:WERN), Skyline Champion Corporation (NYSE:SKY), CNX Resources Corporation (NYSE:CNX), and Alamos Gold Inc (NYSE:AGI). All of these stocks' market caps are similar to EGHT's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NWE,15,56305,4 AZUL,10,120056,-1 AMWL,20,124952,1 WERN,20,203288,-1 SKY,23,353727,0 CNX,30,539926,7 AGI,20,221648,-2 Average,19.7,231415,1.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.7 hedge funds with bullish positions and the average amount invested in these stocks was $231 million. That figure was $928 million in EGHT's case. CNX Resources Corporation (NYSE:CNX) is the most popular stock in this table. On the other hand Azul S.A. (NYSE:AZUL) is the least popular one with only 10 bullish hedge fund positions. 8x8, Inc. (NYSE: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 87.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately EGHT wasn't nearly as popular as these 5 stocks and hedge funds that were betting on EGHT were disappointed as the stock returned -13.4% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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