Is Shenandoah Telecommunications Company (NASDAQ:SHEN) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Shenandoah Telecommunications Company (NASDAQ:SHEN) the right pick for your portfolio? Hedge funds are selling. The number of long hedge fund positions dropped by 3 in recent months. Our calculations also showed that SHEN isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 check out the latest hedge fund action regarding Shenandoah Telecommunications Company (NASDAQ:SHEN).
Hedge fund activity in Shenandoah Telecommunications Company (NASDAQ:SHEN)
At Q4's end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -21% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards SHEN over the last 14 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Shenandoah Telecommunications Company (NASDAQ:SHEN), with a stake worth $61.9 million reported as of the end of December. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $10 million. GLG Partners, AQR Capital Management, and GAMCO Investors were also very fond of the stock, giving the stock large weights in their portfolios.
Because Shenandoah Telecommunications Company (NASDAQ:SHEN) has witnessed bearish sentiment from hedge fund managers, logic holds that there exists a select few money managers who were dropping their entire stakes last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital sold off the biggest position of all the hedgies monitored by Insider Monkey, comprising close to $3.7 million in stock, and Alec Litowitz and Ross Laser's Magnetar Capital was right behind this move, as the fund dumped about $0.3 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 3 funds last quarter.
Let's now review hedge fund activity in other stocks similar to Shenandoah Telecommunications Company (NASDAQ:SHEN). We will take a look at South State Corporation (NASDAQ:SSB), Ellie Mae Inc (NYSE:ELLI), Greif, Inc. (NYSE:GEF), and Piedmont Office Realty Trust, Inc. (NYSE:PDM). All of these stocks' market caps resemble SHEN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SSB,14,71136,-1 ELLI,18,504870,3 GEF,20,108586,1 PDM,14,117918,4 Average,16.5,200628,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $201 million. That figure was $95 million in SHEN's case. Greif, Inc. (NYSE:GEF) is the most popular stock in this table. On the other hand South State Corporation (NASDAQ:SSB) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Shenandoah Telecommunications Company (NASDAQ:SHEN) is even less popular than SSB. Hedge funds dodged a bullet by taking a bearish stance towards SHEN. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately SHEN wasn't nearly as popular as these 15 stock (hedge fund sentiment was very bearish); SHEN investors were disappointed as the stock returned -3.5% 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.