“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on IDT Corporation (NYSE:IDT) in order to identify whether reputable and successful top money managers continue to believe in its potential.
IDT Corporation (NYSE:IDT) was in 13 hedge funds’ portfolios at the end of the second quarter of 2019. IDT has seen a decrease in hedge fund interest recently. There were 14 hedge funds in our database with IDT positions at the end of the previous quarter. Our calculations also showed that IDT isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are several formulas investors can use to grade their holdings. A pair of the most useful formulas are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outpace the broader indices by a very impressive margin (see the details here).
UIn addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Let’s take a look at the fresh hedge fund action encompassing IDT Corporation (NYSE:IDT).
Hedge fund activity in IDT Corporation (NYSE:IDT)
At Q2’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in IDT over the last 16 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
The largest stake in IDT Corporation (NYSE:IDT) was held by Renaissance Technologies, which reported holding $16.7 million worth of stock at the end of March. It was followed by D E Shaw with a $8.5 million position. Other investors bullish on the company included Kahn Brothers, Arrowstreet Capital, and Royce & Associates.
Due to the fact that IDT Corporation (NYSE:IDT) has faced a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there were a few hedge funds that elected to cut their full holdings heading into Q3. Intriguingly, Benjamin A. Smith’s Laurion Capital Management dumped the largest position of all the hedgies watched by Insider Monkey, totaling an estimated $0.8 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund dumped about $0.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 1 funds heading into Q3.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as IDT Corporation (NYSE:IDT) but similarly valued. These stocks are Sientra Inc (NASDAQ:SIEN), Preformed Line Products Company (NASDAQ:PLPC), Century Casinos, Inc. (NASDAQ:CNTY), and Cellular Biomedicine Group, Inc. (NASDAQ:CBMG). All of these stocks’ market caps are closest to IDT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SIEN | 19 | 100867 | 5 |
| PLPC | 5 | 30712 | -2 |
| CNTY | 10 | 60108 | 4 |
| CBMG | 1 | 11123 | -1 |
| Average | 8.75 | 50703 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.75 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $36 million in IDT’s case. Sientra Inc (NASDAQ:SIEN) is the most popular stock in this table. On the other hand Cellular Biomedicine Group, Inc. (NASDAQ:CBMG) is the least popular one with only 1 bullish hedge fund positions. IDT Corporation (NYSE:IDT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on IDT as the stock returned 11.2% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
