Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
ATN International, Inc. (NASDAQ:ATNI) has seen an increase in activity from the world’s largest hedge funds lately. There were 8 smart money investors long the stock at the end of the third quarter, which is up by 2 from the previous quarter. In spite of this new enthusiasm for the stock, the number of its shareholders was far from enough for it to be included in the list of 30 most popular stocks among hedge funds in Q3 of 2018. But, just because the company wasn’t a part of the favorite group of stocks during the quarter that doesn’t mean it is not popular when compared to similarly valued companies. That’s why, we are going to analyze ATN International, Inc. (NASDAQ:ATNI) furthermore.
Here is what Third Avenue, one of its largest shareholders, recently said about the stock in its Small-Cap Value Fund’s Portfolio Manager Commentary:
“ATNI had a spectacular quarter, rising over 40%. The thesis on ATNI was described in the Fund’s June 30,2018 letter. When the position was initiated, we believed that the valuation overly discounted the impacts from hurricane damage to its Caribbean telecom infrastructure assets. The thesis has played out well so far, as results for the second quarter showed impressive improvement. The company has done an outstanding job rebuilding its asset base while also investing for the future. In addition, they monetized assets during the quarter at a premium to our net asset value estimates. The recent sale of their alternative energy assets is a prototypical example of the resource conversion actions that Fun Management craves. ATNI is run by a quintessential Third Avenue management team. They are skilled operators, creative financiers and prudent allocators. They also have a dispassionate attitude towards their assets and sell willingly if the price is right. We are happy shareowners and are confident management will wisely redeploy the sales proceeds.”
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 17.4% year to date and outperformed the market by more than 14 percentage points this year. This strategy also outperformed the market by 3 percentage points in the fourth quarter despite the market volatility (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a peek at the latest hedge fund action regarding ATN International, Inc. (NASDAQ:ATNI).
What does the smart money think about ATN International, Inc. (NASDAQ:ATNI)?
Heading into the fourth quarter of 2018, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ATNI over the last 13 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in ATN International, Inc. (NASDAQ:ATNI) was held by Renaissance Technologies, which reported holding $42.6 million worth of stock at the end of September. It was followed by Royce & Associates with a $12.6 million position. Other investors bullish on the company included Third Avenue Management, D E Shaw, and Millennium Management.
Consequently, specific money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, created the most valuable position in ATN International, Inc. (NASDAQ:ATNI). Millennium Management had $1.8 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $1.3 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Noam Gottesman’s GLG Partners.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as ATN International, Inc. (NASDAQ:ATNI) but similarly valued. These stocks are Covia Holdings Corporation (NYSE:CVIA), Lakeland Financial Corporation (NASDAQ:LKFN), and The Marcus Corporation (NYSE:MCS). This group of stocks’ market caps resemble SPG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CVIA | 7 | 100818 | 1 |
| LKFN | 12 | 30965 | 2 |
| MCS | 13 | 80782 | 4 |
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was also $71 million in ATNI’s case. The Marcus Corporation (NYSE:MCS) is the most popular stock in this table. On the other hand Covia Holdings Corporation (NYSE:CVIA) is the least popular one with only 7 bullish hedge fund positions. ATN International, Inc. (NASDAQ:ATNI) 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 MCS might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
