Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards COMSovereign Holding Corp. (NASDAQ:COMS).
Is COMS a good stock to buy? The smart money was becoming more confident. The number of long hedge fund bets moved up by 3 recently. COMSovereign Holding Corp. (NASDAQ:COMS) was in 3 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that COMS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Bart Baum of Ionic Capital Management
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Do Hedge Funds Think COMS Is A Good Stock To Buy Now?
At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3 from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards COMS over the last 23 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Ionic Capital Management was the largest shareholder of COMSovereign Holding Corp. (NASDAQ:COMS), with a stake worth $0.9 million reported as of the end of March. Trailing Ionic Capital Management was Citadel Investment Group, which amassed a stake valued at $0.4 million. P.A.W. CAPITAL PARTNERS was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position P.A.W. CAPITAL PARTNERS allocated the biggest weight to COMSovereign Holding Corp. (NASDAQ:COMS), around 0.28% of its 13F portfolio. Ionic Capital Management is also relatively very bullish on the stock, setting aside 0.11 percent of its 13F equity portfolio to COMS.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Ionic Capital Management, managed by Bart Baum, initiated the most valuable position in COMSovereign Holding Corp. (NASDAQ:COMS). Ionic Capital Management had $0.9 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.4 million position during the quarter. The other funds with brand new COMS positions are Peter A. Wright’s P.A.W. CAPITAL PARTNERS and Ken Griffin’s Citadel Investment Group.
Let’s go over hedge fund activity in other stocks similar to COMSovereign Holding Corp. (NASDAQ:COMS). These stocks are LMP Automotive Holdings, Inc. (NASDAQ:LMPX), Potbelly Corp (NASDAQ:PBPB), Enzo Biochem, Inc. (NYSE:ENZ), Qilian International Holding Group Limited (NASDAQ:QLI), Eagle Bancorp Montana Inc (NASDAQ:EBMT), BiomX Inc. (NYSE:PHGE), and Flux Power Holdings, Inc. (NASDAQ:FLUX). This group of stocks’ market valuations are closest to COMS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LMPX | 2 | 419 | 0 |
| PBPB | 10 | 46182 | 4 |
| ENZ | 7 | 40193 | -4 |
| QLI | 2 | 236 | 2 |
| EBMT | 4 | 13222 | 0 |
| PHGE | 7 | 22929 | 1 |
| FLUX | 1 | 971 | -1 |
| Average | 4.7 | 17736 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.7 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $2 million in COMS’s case. Potbelly Corp (NASDAQ:PBPB) is the most popular stock in this table. On the other hand Flux Power Holdings, Inc. (NASDAQ:FLUX) is the least popular one with only 1 bullish hedge fund positions. COMSovereign Holding Corp. (NASDAQ:COMS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for COMS is 25.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately COMS wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); COMS investors were disappointed as the stock returned -1.1% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.