Last year’s fourth quarter was a rough one for investors and many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 37.4% in 2019 (through the end of November) and outperformed the S&P 500 ETF by 9.9 percentage points. We are done processing the latest 13F filings and in this article we will study how hedge fund sentiment towards Teligent, Inc. (NASDAQ:TLGT) changed during the first quarter.
Teligent, Inc. (NASDAQ:TLGT) was in 7 hedge funds’ portfolios at the end of the third quarter of 2019. TLGT has seen a decrease in hedge fund sentiment recently. There were 8 hedge funds in our database with TLGT positions at the end of the previous quarter. Our calculations also showed that TLGT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
David E. Shaw of D.E. Shaw
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a peek at the latest hedge fund action surrounding Teligent, Inc. (NASDAQ:TLGT).
How have hedgies been trading Teligent, Inc. (NASDAQ:TLGT)?
Heading into the fourth quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in TLGT over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Behzad Aghazadeh’s venBio Select Advisor has the most valuable position in Teligent, Inc. (NASDAQ:TLGT), worth close to $5 million, accounting for 0.2% of its total 13F portfolio. Coming in second is Kamran Moghtaderi of Eversept Partners, with a $4.2 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Some other peers that hold long positions comprise Lawrence Hawkins’s Prosight Capital, David E. Shaw’s D E Shaw and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Eversept Partners allocated the biggest weight to Teligent, Inc. (NASDAQ:TLGT), around 1.31% of its 13F portfolio. Prosight Capital is also relatively very bullish on the stock, designating 1.29 percent of its 13F equity portfolio to TLGT.
Because Teligent, Inc. (NASDAQ:TLGT) has faced bearish sentiment from hedge fund managers, it’s easy to see that there is a sect of hedge funds that elected to cut their entire stakes heading into Q4. It’s worth mentioning that Donald Sussman’s Paloma Partners dropped the biggest stake of the “upper crust” of funds tracked by Insider Monkey, worth close to $0.1 million in stock. Efrem Kamen’s fund, Pura Vida Investments, also sold off its stock, about $0 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 1 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Teligent, Inc. (NASDAQ:TLGT) but similarly valued. These stocks are Wheeler Real Estate Investment Trust, Inc. (NASDAQ:WHLRD), DPW Holdings, Inc. (NYSE:DPW), Moleculin Biotech, Inc. (NASDAQ:MBRX), and Psychemedics Corporation (NASDAQ:PMD). All of these stocks’ market caps are similar to TLGT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WHLRD | 3 | 9717 | 3 |
| DPW | 1 | 9351 | 0 |
| MBRX | 2 | 1275 | 1 |
| PMD | 4 | 4677 | 1 |
| Average | 2.5 | 6255 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.5 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $12 million in TLGT’s case. Psychemedics Corporation (NASDAQ:PMD) is the most popular stock in this table. On the other hand DPW Holdings, Inc. (NYSE:DPW) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Teligent, Inc. (NASDAQ:TLGT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately TLGT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on TLGT were disappointed as the stock returned -35.8% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
