How do you pick the next stock to invest in? One way would be to spend hours of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding ShoreTel, Inc. (NASDAQ:SHOR).
Is ShoreTel, Inc. (NASDAQ:SHOR) a worthy investment today? Hedge funds are turning bullish. The number of long hedge fund bets moved up by two lately. ShoreTel, Inc. (NASDAQ:SHOR) was in 23 hedge funds’ portfolios at the end of September. There were 21 hedge funds in our database with ShoreTel, Inc. (NASDAQ:SHOR) positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Seacoast Banking Corporation of Florida (NASDAQ:SBCF), Shoe Carnival, Inc. (NASDAQ:SCVL), and UTi Worldwide Inc. (NASDAQ:UTIW) to gather more data points.
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Today there are dozens of gauges stock market investors have at their disposal to assess publicly traded companies. Two of the best gauges are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the elite fund managers can beat the S&P 500 by a solid amount (see the details here).
With all of this in mind, we’re going to check out the key action regarding ShoreTel, Inc. (NASDAQ:SHOR).
How are hedge funds trading ShoreTel, Inc. (NASDAQ:SHOR)?
At the end of September, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 10% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Park West Asset Management, managed by Peter S. Park, holds the number one position in ShoreTel, Inc. (NASDAQ:SHOR). Park West Asset Management has a $45 million position in the stock, comprising 4.1% of its 13F portfolio. The second most bullish fund manager is Robert G. Moses of RGM Capital, with a $43.9 million position; 5.9% of its 13F portfolio is allocated to the company. Other professional money managers with similar optimism encompass Renaissance Technologies, D. E. Shaw and Israel Englander’s Millennium Management.
As one would reasonably expect, some big names have been driving this bullishness. Elliott Management, managed by Paul Singer, created the biggest position in ShoreTel, Inc. (NASDAQ:SHOR). Elliott had $3 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron’s Algert Coldiron Investors also made a $1.1 million investment in the stock during the quarter. The following funds were also among the new SHOR investors: Peter Muller’s PDT Partners, Joel Greenblatt’s Gotham Asset Management, and Mike Vranos’ Ellington.
Let’s go over hedge fund activity in other stocks similar to ShoreTel, Inc. (NASDAQ:SHOR). These stocks are Seacoast Banking Corporation of Florida (NASDAQ:SBCF), Shoe Carnival, Inc. (NASDAQ:SCVL), UTi Worldwide Inc. (NASDAQ:UTIW), and Star Gas Partners, L.P. (NYSE:SGU). All of these stocks’ market caps are similar to ShoreTel, Inc. (NASDAQ:SHOR)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SBCF | 12 | 59267 | -1 |
| SCVL | 12 | 85428 | -9 |
| UTIW | 16 | 178148 | 2 |
| SGU | 5 | 49903 | 0 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $93 million. By comparison, ShoreTel s more popular among the funds we track and these investors have amassed $139 million worth of shares recently. Therefore, as hedge funds are piling on ShoreTel, it might be a good idea to take a closer look at the company and assess its performance in more detail.
