At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of December 31. In this article, we will use that wealth of knowledge to determine whether or not SBA Communications Corporation (NASDAQ:SBAC) makes for a good investment right now.
SBA Communications Corporation (NASDAQ:SBAC) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 32 hedge funds' portfolios at the end of December. At the end of this article we will also compare SBAC to other stocks including ORIX Corporation (NYSE:IX), McCormick & Company, Incorporated (NYSE:MKC), and Rockwell Automation Inc. (NYSE:ROK) to get a better sense of its popularity.
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 recent hedge fund action regarding SBA Communications Corporation (NASDAQ:SBAC).
How are hedge funds trading SBA Communications Corporation (NASDAQ:SBAC)?
Heading into the first quarter of 2019, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2018. By comparison, 42 hedge funds held shares or bullish call options in SBAC a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Akre Capital Management was the largest shareholder of SBA Communications Corporation (NASDAQ:SBAC), with a stake worth $399.1 million reported as of the end of September. Trailing Akre Capital Management was Renaissance Technologies, which amassed a stake valued at $315.5 million. Millennium Management, D E Shaw, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as SBA Communications Corporation (NASDAQ:SBAC) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of funds that slashed their full holdings by the end of the third quarter. Intriguingly, Barry Lebovits and Joshua Kuntz's Rivulet Capital dumped the largest stake of the "upper crust" of funds monitored by Insider Monkey, valued at about $46.8 million in stock, and Mark Moore's ThornTree Capital Partners was right behind this move, as the fund sold off about $19.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks similar to SBA Communications Corporation (NASDAQ:SBAC). We will take a look at ORIX Corporation (NYSE:IX), McCormick & Company, Incorporated (NYSE:MKC), Rockwell Automation Inc. (NYSE:ROK), and Stanley Black & Decker, Inc. (NYSE:SWK). This group of stocks' market values are closest to SBAC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IX,7,7094,1 MKC,28,266766,7 ROK,35,674107,7 SWK,35,822108,8 Average,26.25,442519,5.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.25 hedge funds with bullish positions and the average amount invested in these stocks was $443 million. That figure was $1489 million in SBAC's case. Rockwell Automation Inc. (NYSE:ROK) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 7 bullish hedge fund positions. SBA Communications Corporation (NASDAQ:SBAC) 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 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Hedge funds were also right about betting on SBAC, though not to the same extent, as the stock returned 18% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.