Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Inteliquent Inc (NASDAQ:IQNT).
Inteliquent Inc (NASDAQ:IQNT) was in 13 hedge funds’ portfolios at the end of September. IQNT investors should pay attention to an increase in support from the world’s most successful money managers lately. There were 11 hedge funds in our database with IQNT positions at the end of the previous quarter. At the end of this article we will also compare IQNT to other stocks including Star Gas Partners, L.P. (NYSE:SGU), Exterran Corp (NYSE:EXTN), and CoBiz Financial Inc (NASDAQ:COBZ) to get a better sense of its popularity.
Follow Inteliquent Inc. (NASDAQ:IQNT)
Follow Inteliquent Inc. (NASDAQ:IQNT)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
solarseven/Shutterstock.com
Hedge fund activity in Inteliquent Inc (NASDAQ:IQNT)
Heading into the fourth quarter of 2016, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, an 18% increase from the second quarter of 2016. On the other hand, there were a total of 18 hedge funds with a bullish position in IQNT at the beginning of this year, so hedge fund ownership of the stock is still down in 2016. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies, led by Jim Simons, holds the biggest position in Inteliquent Inc (NASDAQ:IQNT). Renaissance Technologies has a $33 million position in the stock. Sitting at the No. 2 spot is Nokomis Capital, led by Brett Hendrickson, which holds an $18.2 million position; the fund has 3.9% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism include Arnaud Ajdler’s Engine Capital, Joel Greenblatt’s Gotham Asset Management, and Cliff Asness’ AQR Capital Management. We should note that Engine Capital is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As one would reasonably expect, key hedge funds were breaking ground themselves. Engine Capital established the most valuable position in Inteliquent Inc (NASDAQ:IQNT). Engine Capital had $17.6 million invested in the company at the end of the quarter. Mike Vranos’ Ellington also made a $0.4 million investment in the stock during the quarter. The only other fund with a new position in the stock is Paul Tudor Jones’ Tudor Investment Corp.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Inteliquent Inc (NASDAQ:IQNT) but similarly valued. These stocks are Star Gas Partners, L.P. (NYSE:SGU), Exterran Corp (NYSE:EXTN), CoBiz Financial Inc (NASDAQ:COBZ), and Student Transportation Inc (NASDAQ:STB). This group of stocks’ market values resemble IQNT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SGU | 5 | 49369 | 1 |
| EXTN | 13 | 106185 | -4 |
| COBZ | 8 | 18803 | 1 |
| STB | 6 | 9572 | 2 |
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $46 million. That figure was $83 million in IQNT’s case. Exterran Corp (NYSE:EXTN) is the most popular stock in this table. On the other hand Star Gas Partners, L.P. (NYSE:SGU) is the least popular one with only 5 bullish hedge fund positions. Inteliquent Inc (NASDAQ:IQNT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard EXTN might be a better candidate to consider taking a long position in.
Disclosure: None
