Hedge Funds Souring On ATN International, Inc. (ATNI)

In this article you are going to find out whether hedge funds think ATN International, Inc. (NASDAQ:ATNI) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is ATN International, Inc. (NASDAQ:ATNI) the right pick for your portfolio? Money managers are taking a bearish view. The number of long hedge fund bets decreased by 1 lately. Our calculations also showed that ATNI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). ATNI was in 8 hedge funds’ portfolios at the end of the first quarter of 2020. There were 9 hedge funds in our database with ATNI positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 58 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 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Chuck Royce of Royce & Associates

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to review the new hedge fund action surrounding ATN International, Inc. (NASDAQ:ATNI).

What does smart money think about ATN International, Inc. (NASDAQ:ATNI)?

Heading into the second quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the fourth quarter of 2019. On the other hand, there were a total of 10 hedge funds with a bullish position in ATNI a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Renaissance Technologies, managed by Jim Simons (founder), holds the number one position in ATN International, Inc. (NASDAQ:ATNI). Renaissance Technologies has a $37.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies’s heels is Royce & Associates, managed by Chuck Royce, which holds a $9.3 million position; 0.1% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism consist of Martin Whitman’s Third Avenue Management, Cliff Asness’s AQR Capital Management and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Third Avenue Management allocated the biggest weight to ATN International, Inc. (NASDAQ:ATNI), around 0.95% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.13 percent of its 13F equity portfolio to ATNI.

Seeing as ATN International, Inc. (NASDAQ:ATNI) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of funds who sold off their entire stakes heading into Q4. Intriguingly, Donald Sussman’s Paloma Partners dumped the largest stake of all the hedgies watched by Insider Monkey, comprising about $0.3 million in stock. Gavin Saitowitz and Cisco J. del Valle’s fund, Springbok Capital, also dropped its stock, about $0.1 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 1 funds heading into Q4.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as ATN International, Inc. (NASDAQ:ATNI) but similarly valued. These stocks are SecureWorks Corp. (NASDAQ:SCWX), Winnebago Industries, Inc. (NYSE:WGO), CareDx, Inc. (NASDAQ:CDNA), and Cardlytics, Inc. (NASDAQ:CDLX). This group of stocks’ market caps match ATNI’s market cap.

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As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $145 million. That figure was $59 million in ATNI’s case. Cardlytics, Inc. (NASDAQ:CDLX) is the most popular stock in this table. On the other hand SecureWorks Corp. (NASDAQ:SCWX) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks ATN International, Inc. (NASDAQ:ATNI) is even less popular than SCWX. Hedge funds dodged a bullet by taking a bearish stance towards ATNI. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but managed to beat the market by 14.8 percentage points. Unfortunately ATNI wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); ATNI investors were disappointed as the stock returned 1.6% during the second quarter (through June 17th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

Disclosure: None. This article was originally published at Insider Monkey.