Mitel Networks Corporation (NASDAQ:MITL) is 7% higher on the news that its merger partner, Polycom Inc (NASDAQ:PLCM), might have a second suitor. According to the Wall Street Journal, a private equity firm has made a revised bid for Polycom that might be constituted as superior to Mitel Networks Corporation (NASDAQ:MITL)’s current bid. Polycom and Mitel previously agreed to combine on April 15 in a transaction that received unanimous support of both Boards of Directors. Under the terms of the transaction, Polycom shareholders would own 60% of the combined company. Traders could be buying because of relative valuation, and are likely crossing their fingers in hopes that Mitel doesn’t try to raise its bid to a point that destroys shareholder value.
Is Mitel Networks Corporation (NASDAQ:MITL) worth your attention right now? Investors who are in the know are getting less bullish. The number of bullish hedge fund positions decreased by three lately. MITL was in six hedge funds’ portfolios at the end of March. There were nine hedge funds in our database with MITL holdings at the end of the previous quarter. 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 Caesars Entertainment Corp (NASDAQ:CZR), iKang Healthcare Group Inc (ADR) (NASDAQ:KANG), and PennyMac Mortgage Investment Trust (NYSE:PMT) to gather more data points.
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In the 21st century investor’s toolkit there are a lot of indicators stock traders put to use to grade stocks. Some of the most under-the-radar indicators are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can outpace the S&P 500 by a solid margin (see the details here).
With all of this in mind, we’re going to take a gander at the fresh action regarding Mitel Networks Corporation (NASDAQ:MITL).
Of the funds tracked by Insider Monkey, Paul Singer’s Elliott Management has the biggest position in Mitel Networks Corporation (NASDAQ:MITL), worth close to $96.3 million, amounting to 1% of its total 13F portfolio. On Elliott Management’s heels is Renaissance Technologies, founded by Jim Simons, which holds a $11.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining professional money managers that hold long positions contain David E. Shaw’s D E Shaw, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Israel Englander’s Millennium Management.
Because Mitel Networks Corporation (NASDAQ:MITL) has faced declining sentiment from the aggregate hedge fund industry, we can see that there was a specific group of funds that elected to cut their entire stakes in the first quarter. It’s worth mentioning that Clint Carlson’s Carlson Capital dumped the largest investment of the 700 funds watched by Insider Monkey, valued at about $6.1 million in stock, and Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors was right behind this move, as the fund dropped about $0.6 million worth of shares. These transactions are important to note, as total hedge fund interest was cut by three funds in the fourth quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Mitel Networks Corporation (NASDAQ:MITL) but similarly valued. We will take a look at Caesars Entertainment Corp (NASDAQ:CZR), iKang Healthcare Group Inc (ADR) (NASDAQ:KANG), PennyMac Mortgage Investment Trust (NYSE:PMT), and Ferro Corporation (NYSE:FOE). This group of stocks’ market valuations resembles MITL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CZR | 19 | 270775 | 0 |
| KANG | 12 | 67523 | 4 |
| PMT | 13 | 60450 | -3 |
| FOE | 22 | 231836 | -3 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $158 million. That figure was $116 million in MITL’s case. Ferro Corporation (NYSE:FOE) is the most popular stock in this table. On the other hand, iKang Healthcare Group Inc (ADR) (NASDAQ:KANG) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Mitel Networks Corporation (NASDAQ:MITL) is even less popular than KANG. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
