The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Iridium Communications Inc. (NASDAQ:IRDM).
Hedge fund interest in Iridium Communications Inc. (NASDAQ:IRDM) shares was flat at the end of last quarter. This is usually a negative indicator. 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 CNO Financial Group Inc (NYSE:CNO), Nu Skin Enterprises, Inc. (NYSE:NUS), and Integer Holdings Corporation (NYSE:ITGR) to gather more data points. Our calculations also showed that IRDM isn’t among the 30 most popular stocks among hedge funds (view video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a glance at the new hedge fund action encompassing Iridium Communications Inc. (NASDAQ:IRDM).
Hedge fund activity in Iridium Communications Inc. (NASDAQ:IRDM)
Heading into the third quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in IRDM over the last 16 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Iridium Communications Inc. (NASDAQ:IRDM) was held by Renaissance Technologies, which reported holding $58.8 million worth of stock at the end of March. It was followed by D E Shaw with a $14.5 million position. Other investors bullish on the company included GAMCO Investors, Greenvale Capital, and Royce & Associates.
Due to the fact that Iridium Communications Inc. (NASDAQ:IRDM) has witnessed declining sentiment from hedge fund managers, logic holds that there is a sect of hedge funds who sold off their entire stakes heading into Q3. At the top of the heap, C. Jonathan Gattman’s Cloverdale Capital Management dropped the biggest stake of the 750 funds monitored by Insider Monkey, valued at an estimated $10.7 million in stock. David M. Knott’s fund, Dorset Management, also dropped its stock, about $3 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to Iridium Communications Inc. (NASDAQ:IRDM). These stocks are CNO Financial Group Inc (NYSE:CNO), Nu Skin Enterprises, Inc. (NYSE:NUS), Integer Holdings Corporation (NYSE:ITGR), and Element Solutions Inc (NYSE:ESI). All of these stocks’ market caps resemble IRDM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CNO | 14 | 211942 | 1 |
| NUS | 20 | 283194 | -3 |
| ITGR | 18 | 189554 | -11 |
| ESI | 27 | 654107 | -5 |
| Average | 19.75 | 334699 | -4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $335 million. That figure was $114 million in IRDM’s case. Element Solutions Inc (NYSE:ESI) is the most popular stock in this table. On the other hand CNO Financial Group Inc (NYSE:CNO) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Iridium Communications Inc. (NASDAQ:IRDM) is even less popular than CNO. Hedge funds dodged a bullet by taking a bearish stance towards IRDM. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately IRDM wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); IRDM investors were disappointed as the stock returned -8.5% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
