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Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in Teligent, Inc. (NASDAQ:TLGT)? The smart money sentiment can provide an answer to this question.
Is Teligent, Inc. (NASDAQ:TLGT) worth your attention right now? Hedge funds were betting on the stock. The number of bullish hedge fund positions moved up by 1 lately. Teligent, Inc. (NASDAQ:TLGT) was in 4 hedge funds' portfolios at the end of March. The all time high for this statistic is 13. Our calculations also showed that TLGT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 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 glance at the recent hedge fund action encompassing Teligent, Inc. (NASDAQ:TLGT).
Do Hedge Funds Think TLGT Is A Good Stock To Buy Now?
At first quarter's end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. On the other hand, there were a total of 2 hedge funds with a bullish position in TLGT a year ago. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, holds the number one position in Teligent, Inc. (NASDAQ:TLGT). Nantahala Capital Management has a $2.6 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Kamran Moghtaderi of Eversept Partners, with a $1.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism contain Renaissance Technologies, John Overdeck and David Siegel's Two Sigma Advisors and . In terms of the portfolio weights assigned to each position Eversept Partners allocated the biggest weight to Teligent, Inc. (NASDAQ:TLGT), around 0.12% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, setting aside 0.08 percent of its 13F equity portfolio to TLGT.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Nantahala Capital Management, managed by Wilmot B. Harkey and Daniel Mack, initiated the largest position in Teligent, Inc. (NASDAQ:TLGT). Nantahala Capital Management had $2.6 million invested in the company at the end of the quarter. Kamran Moghtaderi's Eversept Partners also initiated a $1.6 million position during the quarter.
Let's also examine hedge fund activity in other stocks similar to Teligent, Inc. (NASDAQ:TLGT). We will take a look at Helius Medical Technologies, Inc. (NASDAQ:HSDT), Adial Pharmaceuticals, Inc (NASDAQ:ADIL), The L.S. Starrett Company (NYSE:SCX), Pioneer Power Solutions, Inc. (NASDAQ:PPSI), Precipio, Inc. (NASDAQ:PRPO), Skillful Craftsman Education Technology Limited (NASDAQ:EDTK), and Mannatech, Inc. (NASDAQ:MTEX). This group of stocks' market values resemble TLGT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HSDT,2,2622,0 ADIL,1,180,-1 SCX,4,6943,1 PPSI,3,462,-1 PRPO,1,777,-1 EDTK,1,43,0 MTEX,1,1045,0 Average,1.9,1725,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 1.9 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $4 million in TLGT's case. The L.S. Starrett Company (NYSE:SCX) is the most popular stock in this table. On the other hand Adial Pharmaceuticals, Inc (NASDAQ:ADIL) is the least popular one with only 1 bullish hedge fund positions. Teligent, Inc. (NASDAQ:TLGT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for TLGT is 65.2. 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 positive signal but 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 beat the market again by 3.3 percentage points. Unfortunately TLGT wasn't nearly as popular as these 5 stocks and hedge funds that were betting on TLGT were disappointed as the stock returned -3.2% 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.