Were Hedge Funds Right About Gogo Inc (GOGO)?
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 866 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 March 31st. In this article we look at what those investors think of Gogo Inc (NASDAQ:GOGO).
Is Gogo Inc (NASDAQ:GOGO) going to take off soon? Prominent investors were in an optimistic mood. The number of long hedge fund bets rose by 5 recently. Gogo Inc (NASDAQ:GOGO) was in 18 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 22. Our calculations also showed that GOGO isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 13 hedge funds in our database with GOGO positions at the end of the fourth quarter.
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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. Keeping this in mind we're going to take a glance at the recent hedge fund action encompassing Gogo Inc (NASDAQ:GOGO).
Do Hedge Funds Think GOGO Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 38% from the fourth quarter of 2020. By comparison, 19 hedge funds held shares or bullish call options in GOGO a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Tenzing Global Investors, managed by Chet Kapoor, holds the biggest position in Gogo Inc (NASDAQ:GOGO). Tenzing Global Investors has a $41.5 million position in the stock, comprising 13.3% of its 13F portfolio. Coming in second is Mudrick Capital Management, managed by Jason Mudrick, which holds a $38.2 million position; 4.3% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish comprise D. E. Shaw's D E Shaw, Israel Englander's Millennium Management and Amy Minella's Cardinal Capital. In terms of the portfolio weights assigned to each position Tenzing Global Investors allocated the biggest weight to Gogo Inc (NASDAQ:GOGO), around 13.31% of its 13F portfolio. Mudrick Capital Management is also relatively very bullish on the stock, setting aside 4.33 percent of its 13F equity portfolio to GOGO.
As one would reasonably expect, some big names were breaking ground themselves. Cardinal Capital, managed by Amy Minella, created the largest position in Gogo Inc (NASDAQ:GOGO). Cardinal Capital had $8.4 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors also made a $4.9 million investment in the stock during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel's Two Sigma Advisors, Paul Marshall and Ian Wace's Marshall Wace LLP, and Paul Tudor Jones's Tudor Investment Corp.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Gogo Inc (NASDAQ:GOGO) but similarly valued. These stocks are Seacor Holdings, Inc. (NYSE:CKH), Nicolet Bankshares Inc. (NASDAQ:NCBS), The Lovesac Company (NASDAQ:LOVE), Affimed NV (NASDAQ:AFMD), Brigham Minerals, Inc. (NYSE:MNRL), Anterix Inc. (NASDAQ:ATEX), and Chimerix Inc (NASDAQ:CMRX). This group of stocks' market values are similar to GOGO's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CKH,15,121871,-5 NCBS,3,1954,-1 LOVE,18,109630,4 AFMD,23,262344,6 MNRL,13,54346,-4 ATEX,16,368505,1 CMRX,16,200273,3 Average,14.9,159846,0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.9 hedge funds with bullish positions and the average amount invested in these stocks was $160 million. That figure was $172 million in GOGO's case. Affimed NV (NASDAQ:AFMD) is the most popular stock in this table. On the other hand Nicolet Bankshares Inc. (NASDAQ:NCBS) is the least popular one with only 3 bullish hedge fund positions. Gogo Inc (NASDAQ:GOGO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GOGO is 72. 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 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately GOGO wasn't nearly as popular as these 5 stocks and hedge funds that were betting on GOGO were disappointed as the stock returned 6.9% since the end of March (through 7/23) 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.
