At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. 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 Echostar Corporation (NASDAQ:SATS) at the end of the second quarter and determine whether the smart money was really smart about this stock.
Is Echostar Corporation (NASDAQ:SATS) an excellent investment now? Money managers were getting more optimistic. The number of bullish hedge fund bets improved by 5 lately. Echostar Corporation (NASDAQ:SATS) was in 29 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 34. Our calculations also showed that SATS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Nathaniel August of Mangrove Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to take a glance at the latest hedge fund action regarding Echostar Corporation (NASDAQ:SATS).
Hedge fund activity in Echostar Corporation (NASDAQ:SATS)
At the end of the second quarter, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 21% from the previous quarter. By comparison, 28 hedge funds held shares or bullish call options in SATS a year ago. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
The largest stake in Echostar Corporation (NASDAQ:SATS) was held by Renaissance Technologies, which reported holding $110.1 million worth of stock at the end of September. It was followed by Hound Partners with a $73.3 million position. Other investors bullish on the company included Park West Asset Management, Mangrove Partners, and Indaba Capital Management. In terms of the portfolio weights assigned to each position Indaba Capital Management allocated the biggest weight to Echostar Corporation (NASDAQ:SATS), around 11.36% of its 13F portfolio. Quaker Capital Investments is also relatively very bullish on the stock, dishing out 7.92 percent of its 13F equity portfolio to SATS.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Indaba Capital Management, managed by Derek C. Schrier, created the largest position in Echostar Corporation (NASDAQ:SATS). Indaba Capital Management had $30 million invested in the company at the end of the quarter. Mark G. Schoeppner’s Quaker Capital Investments also initiated a $17.5 million position during the quarter. The other funds with new positions in the stock are Michael M. Rothenberg’s Moab Capital Partners, David Einhorn’s Greenlight Capital, and Jerry Kochanski’s Shelter Haven Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Echostar Corporation (NASDAQ:SATS) but similarly valued. We will take a look at WNS (Holdings) Limited (NYSE:WNS), El Paso Electric Company (NYSE:EE), EnerSys (NYSE:ENS), Watts Water Technologies Inc (NYSE:WTS), LiveRamp Holdings, Inc. (NYSE:RAMP), Plug Power, Inc. (NASDAQ:PLUG), and John Bean Technologies Corporation (NYSE:JBT). This group of stocks’ market caps are similar to SATS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WNS | 20 | 230288 | 3 |
| EE | 15 | 248090 | -8 |
| ENS | 26 | 109145 | 10 |
| WTS | 25 | 250368 | 6 |
| RAMP | 25 | 180604 | 9 |
| PLUG | 20 | 271588 | 5 |
| JBT | 16 | 93148 | 4 |
| Average | 21 | 197604 | 4.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $198 million. That figure was $395 million in SATS’s case. EnerSys (NYSE:ENS) is the most popular stock in this table. On the other hand El Paso Electric Company (NYSE:EE) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Echostar Corporation (NASDAQ:SATS) is more popular among hedge funds. Our overall hedge fund sentiment score for SATS is 85.6. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23.8% in 2020 through September 14th and still beat the market by 17.6 percentage points. Unfortunately SATS wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on SATS were disappointed as the stock returned 0.6% since the end of the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Echostar Corp (NASDAQ:SATS)
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Disclosure: None. This article was originally published at Insider Monkey.
