In this article we are going to use hedge fund sentiment as a tool and determine whether Borqs Technologies, Inc. (NASDAQ:BRQS) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Borqs Technologies, Inc. (NASDAQ:BRQS) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of March. Our calculations also showed that BRQS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare BRQS to other stocks including Pathfinder Bancorp, Inc. (NASDAQ:PBHC), Aridis Pharmaceuticals Inc. (NASDAQ:ARDS), and Digital Ally, Inc. (NASDAQ:DGLY) to get a better sense of its popularity.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $30 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we're going to take a gander at the fresh hedge fund action regarding Borqs Technologies, Inc. (NASDAQ:BRQS).
Do Hedge Funds Think BRQS Is A Good Stock To Buy Now?
At the end of March, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards BRQS over the last 23 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, PEAK6 Capital Management held the most valuable stake in Borqs Technologies, Inc. (NASDAQ:BRQS), which was worth $0.3 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $0.3 million worth of shares. Millennium Management was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position PEAK6 Capital Management allocated the biggest weight to Borqs Technologies, Inc. (NASDAQ:BRQS), around 0.0007% of its 13F portfolio. Citadel Investment Group is also relatively very bullish on the stock, setting aside 0.0001 percent of its 13F equity portfolio to BRQS.
Judging by the fact that Borqs Technologies, Inc. (NASDAQ:BRQS) has experienced falling interest from the smart money, we can see that there lies a certain "tier" of hedge funds that elected to cut their entire stakes in the first quarter. Intriguingly, Renaissance Technologies dropped the biggest investment of all the hedgies followed by Insider Monkey, valued at close to $0.4 million in stock. John Overdeck and David Siegel's fund, Two Sigma Advisors, also dumped its stock, about $0 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Borqs Technologies, Inc. (NASDAQ:BRQS) but similarly valued. These stocks are Pathfinder Bancorp, Inc. (NASDAQ:PBHC), Aridis Pharmaceuticals Inc. (NASDAQ:ARDS), Digital Ally, Inc. (NASDAQ:DGLY), Nephros, Inc. (NASDAQ:NEPH), Salarius Pharmaceuticals, Inc. (NASDAQ:SLRX), Canterbury Park Holding Corporation (NASDAQ:CPHC), and NCS Multistage Holdings, Inc. (NASDAQ:NCSM). All of these stocks' market caps resemble BRQS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PBHC,1,3621,0 ARDS,2,3806,1 DGLY,4,1229,3 NEPH,5,27704,0 SLRX,8,13352,5 CPHC,1,5460,0 NCSM,1,225,1 Average,3.1,7914,1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.1 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $1 million in BRQS's case. Salarius Pharmaceuticals, Inc. (NASDAQ:SLRX) is the most popular stock in this table. On the other hand Pathfinder Bancorp, Inc. (NASDAQ:PBHC) is the least popular one with only 1 bullish hedge fund positions. Borqs Technologies, Inc. (NASDAQ:BRQS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for BRQS is 34.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately BRQS wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); BRQS investors were disappointed as the stock returned -37.8% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Disclosure: None. This article was originally published at Insider Monkey.