Is Mitel Networks Corporation (NASDAQ:MITL) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They sometimes fail miserably but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Is Mitel Networks Corporation (NASDAQ:MITL) ready to rally soon? Hedge funds are becoming less confident. The number of bullish hedge fund positions decreased by 3 in recent months. Our calculations also showed that MITL 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’ 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 market by 18 percentage points since May 2014 through December 3, 2018 (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.
Let’s take a gander at the fresh hedge fund action surrounding Mitel Networks Corporation (NASDAQ:MITL).
How are hedge funds trading Mitel Networks Corporation (NASDAQ:MITL)?
At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the previous quarter. On the other hand, there were a total of 18 hedge funds with a bullish position in MITL at the beginning of this year. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
The largest stake in Mitel Networks Corporation (NASDAQ:MITL) was held by Alpine Associates, which reported holding $61.1 million worth of stock at the end of September. It was followed by GLG Partners with a $39.2 million position. Other investors bullish on the company included Paulson & Co, P2 Capital Partners, and Glazer Capital.
Due to the fact that Mitel Networks Corporation (NASDAQ:MITL) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there was a specific group of hedgies that slashed their positions entirely last quarter. Interestingly, Simon Davies’s Sand Grove Capital Partners dropped the largest stake of all the hedgies watched by Insider Monkey, valued at about $98 million in stock, and Adam Fox and Samuel Elder’s Altalis Capital Partners was right behind this move, as the fund dumped about $2.6 million worth. These transactions are important to note, as total hedge fund interest fell by 3 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Mitel Networks Corporation (NASDAQ:MITL). We will take a look at Washington Prime Group Inc. (NYSE:WPG), CSG Systems International, Inc. (NASDAQ:CSGS), DBV Technologies S.A. (NASDAQ:DBVT), and The E.W. Scripps Company (NYSE:SSP). This group of stocks’ market values resemble MITL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WPG | 10 | 8309 | -1 |
| CSGS | 14 | 150432 | -1 |
| DBVT | 9 | 279458 | -1 |
| SSP | 12 | 206558 | -3 |
| Average | 11.25 | 161189 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $161 million. That figure was $306 million in MITL’s case. CSG Systems International, Inc. (NASDAQ:CSGS) is the most popular stock in this table. On the other hand DBV Technologies S.A. (NASDAQ:DBVT) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Mitel Networks Corporation (NASDAQ:MITL) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
