Is Nortel Inversora S.A. (ADR) (NYSE:NTL) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Hedge fund interest in Nortel Inversora S.A. (ADR) (NYSE:NTL) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Pinnacle Entertainment, Inc (NASDAQ:PNK), Group 1 Automotive, Inc. (NYSE:GPI), and Imperva Inc (NYSE:IMPV) to gather more data points.
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Now, we’re going to take a look at the fresh action encompassing Nortel Inversora S.A. (ADR) (NYSE:NTL).
What does the smart money think about Nortel Inversora S.A. (ADR) (NYSE:NTL)?
When looking at the institutional investors followed by Insider Monkey, Jim Simons’s Renaissance Technologies has the number one position in Nortel Inversora S.A. (ADR) (NYSE:NTL), worth close to $7.7 million, corresponding to less than 0.1%% of its total 13F portfolio. The second largest stake is held by Jonathan Kolatch of Redwood Capital Management, with a $6.7 million position; 1% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism encompass Edmond M. Safra’s EMS Capital, and Charles de Vaulx’s International Value Advisers.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Nortel Inversora S.A. (ADR) (NYSE:NTL) but similarly valued. We will take a look at Pinnacle Entertainment, Inc (NASDAQ:PNK), Group 1 Automotive, Inc. (NYSE:GPI), Imperva Inc (NYSE:IMPV), and Manitowoc Company, Inc. (NYSE:MTW). This group of stocks’ market valuations resemble NTL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PNK | 30 | 584036 | -4 |
| GPI | 25 | 420964 | 11 |
| IMPV | 23 | 133672 | 0 |
| MTW | 21 | 938318 | -4 |
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $519 million. That figure was $17 million in NTL’s case. Pinnacle Entertainment, Inc (NASDAQ:PNK) is the most popular stock in this table. On the other hand Manitowoc Company, Inc. (NYSE:MTW) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Nortel Inversora S.A. (ADR) (NYSE:NTL) is even less popular than MTW. 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.
