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 have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Pareteum Corporation (NASDAQ:TEUM) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Pareteum Corporation (NASDAQ:TEUM) was in 4 hedge funds’ portfolios at the end of September. The all time high for this statistics is 9. TEUM has experienced a decrease in enthusiasm from smart money lately. There were 7 hedge funds in our database with TEUM positions at the end of the second quarter. Our calculations also showed that TEUM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jim Simons founder of Renaissance Technologies
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s take a look at the latest hedge fund action regarding Pareteum Corporation (NASDAQ:TEUM).
How are hedge funds trading Pareteum Corporation (NASDAQ:TEUM)?
Heading into the fourth quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -43% from one quarter earlier. By comparison, 5 hedge funds held shares or bullish call options in TEUM a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Israel Englander’s Millennium Management has the largest position in Pareteum Corporation (NASDAQ:TEUM), worth close to $0.4 million, amounting to less than 0.1%% of its total 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which holds a $0.1 million call position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions encompass Ken Griffin’s Citadel Investment Group, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners and Renaissance Technologies. In terms of the portfolio weights assigned to each position LMR Partners allocated the biggest weight to Pareteum Corporation (NASDAQ:TEUM), around 0.0007% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, setting aside 0.0004 percent of its 13F equity portfolio to TEUM.
Because Pareteum Corporation (NASDAQ:TEUM) has witnessed a decline in interest from the smart money, it’s easy to see that there lies a certain “tier” of funds that elected to cut their full holdings heading into Q4. At the top of the heap, Donald Sussman’s Paloma Partners cut the largest investment of the “upper crust” of funds tracked by Insider Monkey, totaling an estimated $0.2 million in stock, and Karim Abbadi and Edward McBride’s Centiva Capital was right behind this move, as the fund cut about $0.1 million worth. These moves are interesting, as total hedge fund interest fell by 3 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to Pareteum Corporation (NASDAQ:TEUM). We will take a look at Ultralife Corp. (NASDAQ:ULBI), Solid Biosciences Inc. (NASDAQ:SLDB), OncoCyte Corporation (NYSE:OCX), Lipocine Inc (NASDAQ:LPCN), Frequency Electronics, Inc. (NASDAQ:FEIM), China Automotive Systems, Inc. (NASDAQ:CAAS), and NeuroBo Pharmaceuticals, Inc. (NASDAQ:NRBO). This group of stocks’ market valuations resemble TEUM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ULBI | 4 | 2236 | 1 |
| SLDB | 11 | 26616 | -1 |
| OCX | 5 | 29185 | -2 |
| LPCN | 3 | 663 | -1 |
| FEIM | 4 | 9778 | 0 |
| CAAS | 1 | 1503 | 0 |
| NRBO | 2 | 1406 | -1 |
| Average | 4.3 | 10198 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.3 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $0 million in TEUM’s case. Solid Biosciences Inc. (NASDAQ:SLDB) is the most popular stock in this table. On the other hand China Automotive Systems, Inc. (NASDAQ:CAAS) is the least popular one with only 1 bullish hedge fund positions. Pareteum Corporation (NASDAQ:TEUM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for TEUM is 30.3. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and surpassed the market again by 16.1 percentage points. Unfortunately TEUM wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); TEUM investors were disappointed as the stock returned -45.6% since the end of September (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Pareteum Corp (NYSEMKT:TEUM)
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Disclosure: None. This article was originally published at Insider Monkey.
