The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Telecom Argentina SA (ADR) (NYSE:TEO) from the perspective of those successful funds.
Is Telecom Argentina SA (ADR) (NYSE:TEO) a healthy stock for your portfolio? Hedge funds are definitely in a bearish mood. The number of bullish hedge fund bets retreated by 1 lately. TEO was in 10 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with TEO holdings at the end of the previous quarter. At the end of this article we will also compare TEO to other stocks including Webster Financial Corporation (NYSE:WBS), Tallgrass Energy Partners LP (NYSE:TEP), and Legg Mason, Inc. (NYSE:LM) to get a better sense of its popularity.
Follow Telecom Argentina S A (NYSE:TEO)
Follow Telecom Argentina S A (NYSE:TEO)
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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Hedge fund activity in Telecom Argentina SA (ADR) (NYSE:TEO)
Heading into the fourth quarter of 2016, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, down by 9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards TEO over the last 5 quarters. 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, Renaissance Technologies, one of the largest hedge funds in the world has the biggest position in Telecom Argentina SA (ADR) (NYSE:TEO), worth close to $33.9 million. On Renaissance Technologies’ heels is EMS Capital, led by Edmond M. Safra, holding a $18.9 million position; 1.9% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism consist of Kevin D. Eng’s Columbus Hill Capital Management, David Halpert’s Prince Street Capital Management and Joseph Oughourlian and Michel Brogard’s Amber Capital. We should note that Columbus Hill Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Since Telecom Argentina SA (ADR) (NYSE:TEO) has sustained declining sentiment from hedge fund managers, it’s safe to say that there were a few hedge funds that slashed their positions entirely heading into Q4. At the top of the heap, Howard Marks’s Oaktree Capital Management said goodbye to the largest position of all the hedgies followed by Insider Monkey, valued at an estimated $10.2 million in stock, and Satyen Mehta’s Neon Liberty Capital Management was right behind this move, as the fund dumped about $8.2 million worth of shares.
Let’s now review hedge fund activity in other stocks similar to Telecom Argentina SA (ADR) (NYSE:TEO). We will take a look at Webster Financial Corporation (NYSE:WBS), Tallgrass Energy Partners LP (NYSE:TEP), Legg Mason, Inc. (NYSE:LM), and Corelogic Inc (NYSE:CLGX). This group of stocks’ market caps are closest to TEO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WBS | 13 | 223939 | -2 |
| TEP | 5 | 38897 | 0 |
| LM | 26 | 516058 | -6 |
| CLGX | 19 | 387224 | -3 |
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $292 million. That figure was $85 million in TEO’s case. Legg Mason, Inc. (NYSE:LM) is the most popular stock in this table. On the other hand Tallgrass Energy Partners LP (NYSE:TEP) is the least popular one with only 5 bullish hedge fund positions. Telecom Argentina SA (ADR) (NYSE:TEO) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LM might be a better candidate to consider taking a long position in.
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