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Hedge Funds Are Warming Up To SBA Communications Corporation (SBAC)

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  • SBAC

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 873 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th. In this article we look at what those investors think of SBA Communications Corporation (NASDAQ:SBAC).

Is SBA Communications Corporation (NASDAQ:SBAC) a buy here? The best stock pickers were becoming hopeful. The number of long hedge fund bets rose by 5 recently. SBA Communications Corporation (NASDAQ:SBAC) was in 43 hedge funds' portfolios at the end of June. The all time high for this statistic is 57. Our calculations also showed that SBAC isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 38 hedge funds in our database with SBAC holdings at the end of March.

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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.


Louis Bacon Moore of Moore Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, artificial intelligence is one of the fastest-growing industries right now, so we are checking out stock pitches like this emerging AI 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. Now let's review the fresh hedge fund action regarding SBA Communications Corporation (NASDAQ:SBAC).

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

At Q2's end, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SBAC over the last 24 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Among these funds, Akre Capital Management held the most valuable stake in SBA Communications Corporation (NASDAQ:SBAC), which was worth $615.2 million at the end of the second quarter. On the second spot was D E Shaw which amassed $227.4 million worth of shares. Citadel Investment Group, Diamond Hill Capital, and Arrowstreet Capital 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 Zeno Research allocated the biggest weight to SBA Communications Corporation (NASDAQ:SBAC), around 7.98% of its 13F portfolio. Land & Buildings Investment Management is also relatively very bullish on the stock, setting aside 6.09 percent of its 13F equity portfolio to SBAC.

As one would reasonably expect, key hedge funds were breaking ground themselves. Moore Global Investments, managed by Louis Bacon, initiated the most valuable position in SBA Communications Corporation (NASDAQ:SBAC). Moore Global Investments had $39.2 million invested in the company at the end of the quarter. John Khoury's Long Pond Capital also made a $34.3 million investment in the stock during the quarter. The following funds were also among the new SBAC investors: Noam Gottesman's GLG Partners, Steve Cohen's Point72 Asset Management, and Daniel Johnson's Gillson Capital.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as SBA Communications Corporation (NASDAQ:SBAC) but similarly valued. These stocks are Corning Incorporated (NYSE:GLW), Welltower Inc. (NYSE:WELL), Nutrien Ltd. (NYSE:NTR), KKR & Co Inc. (NYSE:KKR), LyondellBasell Industries NV (NYSE:LYB), Yum! Brands, Inc. (NYSE:YUM), and Archer Daniels Midland Company (NYSE:ADM). This group of stocks' market valuations resemble SBAC's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GLW,42,521738,10 WELL,19,427197,-2 NTR,28,596869,-5 KKR,54,5347811,-2 LYB,41,888236,-6 YUM,35,652331,3 ADM,41,837799,7 Average,37.1,1324569,0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.1 hedge funds with bullish positions and the average amount invested in these stocks was $1325 million. That figure was $2157 million in SBAC's case. KKR & Co Inc. (NYSE:KKR) is the most popular stock in this table. On the other hand Welltower Inc. (NYSE:WELL) is the least popular one with only 19 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. Our overall hedge fund sentiment score for SBAC is 66.9. 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. 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 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on SBAC as the stock returned 4.8% since the end of Q2 (through 10/1) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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