How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don't always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Mobileiron Inc (NASDAQ:MOBL).
Hedge fund interest in Mobileiron Inc (NASDAQ:MOBL) 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 AK Steel Holding Corporation (NYSE:AKS), Costamare Inc (NYSE:CMRE), and Target Hospitality Corp. (NASDAQ:TH) to gather more data points. Our calculations also showed that MOBL 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.
In the eyes of most stock holders, hedge funds are viewed as slow, old investment tools of years past. While there are more than 8000 funds with their doors open today, We look at the masters of this group, approximately 750 funds. It is estimated that this group of investors direct the majority of the smart money's total capital, and by observing their inimitable equity investments, Insider Monkey has unsheathed numerous investment strategies that have historically surpassed the broader indices. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_27676" align="aligncenter" width="355"] Israel Englander of Millennium Management[/caption]
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. Let's review the latest hedge fund action surrounding Mobileiron Inc (NASDAQ:MOBL).
How have hedgies been trading Mobileiron Inc (NASDAQ:MOBL)?
Heading into the fourth quarter of 2019, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MOBL over the last 17 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, Altai Capital held the most valuable stake in Mobileiron Inc (NASDAQ:MOBL), which was worth $52 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $29.2 million worth of shares. Greenhouse Funds, Millennium Management, and Arrowstreet Capital were 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 Altai Capital allocated the biggest weight to Mobileiron Inc (NASDAQ:MOBL), around 45% of its 13F portfolio. Greenhouse Funds is also relatively very bullish on the stock, designating 2.46 percent of its 13F equity portfolio to MOBL.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Ellington. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Springbok Capital).
Let's now take a look at hedge fund activity in other stocks similar to Mobileiron Inc (NASDAQ:MOBL). These stocks are AK Steel Holding Corporation (NYSE:AKS), Costamare Inc (NYSE:CMRE), Target Hospitality Corp. (NASDAQ:TH), and Endo International plc (NASDAQ:ENDP). All of these stocks' market caps are closest to MOBL's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AKS,13,27000,-1 CMRE,11,26252,1 TH,20,63509,3 ENDP,19,208550,-2 Average,15.75,81328,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $81 million. That figure was $128 million in MOBL's case. Target Hospitality Corp. (NASDAQ:TH) is the most popular stock in this table. On the other hand Costamare Inc (NYSE:CMRE) is the least popular one with only 11 bullish hedge fund positions. Mobileiron Inc (NASDAQ:MOBL) 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. 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 MOBL wasn't nearly as popular as these 20 stocks and hedge funds that were betting on MOBL were disappointed as the stock returned -26.2% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.