Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Echostar Corporation (NASDAQ:SATS).
Is Echostar Corporation (NASDAQ:SATS) going to take off soon? Prominent investors were reducing their bets on the stock. The number of long hedge fund bets went down by 3 in recent months. Echostar Corporation (NASDAQ:SATS) was in 28 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 34. Our calculations also showed that SATS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 31 hedge funds in our database with SATS holdings at the end of December.
In the 21st century investor’s toolkit there are many gauges stock market investors have at their disposal to size up their stock investments. A couple of the best gauges are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outperform the broader indices by a healthy margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
David Einhorn of Greenlight Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. Keeping this in mind let’s take a look at the recent hedge fund action regarding Echostar Corporation (NASDAQ:SATS).
Do Hedge Funds Think SATS Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in SATS a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Echostar Corporation (NASDAQ:SATS), which was worth $76.7 million at the end of the fourth quarter. On the second spot was Quaker Capital Investments which amassed $28.6 million worth of shares. Greenlight Capital, Arrowstreet Capital, and AQR 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 Quaker Capital Investments allocated the biggest weight to Echostar Corporation (NASDAQ:SATS), around 11.62% of its 13F portfolio. Greenlight Capital is also relatively very bullish on the stock, setting aside 1.7 percent of its 13F equity portfolio to SATS.
Because Echostar Corporation (NASDAQ:SATS) has faced falling interest from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of funds who sold off their entire stakes by the end of the first quarter. Interestingly, Jonathan Auerbach’s Hound Partners cut the largest stake of the “upper crust” of funds tracked by Insider Monkey, worth about $33.2 million in stock. Noah Levy and Eugene Dozortsev’s fund, Newtyn Management, also dumped its stock, about $14.8 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 3 funds by the end of the first quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Echostar Corporation (NASDAQ:SATS) but similarly valued. These stocks are NGM Biopharmaceuticals, Inc. (NASDAQ:NGM), Dream Finders Homes, Inc. (NASDAQ:DFH), World Fuel Services Corporation (NYSE:INT), GCM Grosvenor Inc. (NASDAQ:GCMG), Xenia Hotels & Resorts Inc (NYSE:XHR), Paramount Group Inc (NYSE:PGRE), and Azul S.A. (NYSE:AZUL). All of these stocks’ market caps resemble SATS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NGM | 18 | 329277 | 5 |
| DFH | 10 | 54869 | 10 |
| INT | 15 | 85346 | -3 |
| GCMG | 17 | 181069 | 1 |
| XHR | 6 | 8631 | 0 |
| PGRE | 17 | 135595 | -1 |
| AZUL | 11 | 69381 | -6 |
| Average | 13.4 | 123453 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.4 hedge funds with bullish positions and the average amount invested in these stocks was $123 million. That figure was $232 million in SATS’s case. NGM Biopharmaceuticals, Inc. (NASDAQ:NGM) is the most popular stock in this table. On the other hand Xenia Hotels & Resorts Inc (NYSE:XHR) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Echostar Corporation (NASDAQ:SATS) is more popular among hedge funds. Our overall hedge fund sentiment score for SATS is 76.7. 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 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Unfortunately SATS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on SATS were disappointed as the stock returned -1.1% since the end of the first quarter (through 7/9) 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 most of these stocks already outperformed the market since 2019.
Follow Echostar Corp (NASDAQ:SATS)
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Disclosure: None. This article was originally published at Insider Monkey.
