The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have gone over 730 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 28th. In this article we look at what those investors think of Millicom International Cellular S.A. (NASDAQ:TIGO).
Hedge fund interest in Millicom International Cellular S.A. (NASDAQ:TIGO) 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 Knight-Swift Transportation Holdings Inc. (NYSE:KNX), Jefferies Financial Group Inc. (NYSE:JEF), and HUYA Inc. (NYSE:HUYA) to gather more data points.
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. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a look at the new hedge fund action encompassing Millicom International Cellular S.A. (NASDAQ:TIGO).
How are hedge funds trading Millicom International Cellular S.A. (NASDAQ:TIGO)?
At Q2's end, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in TIGO a year ago. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
The largest stake in Millicom International Cellular S.A. (NASDAQ:TIGO) was held by GAMCO Investors, which reported holding $70.4 million worth of stock at the end of March. It was followed by Cove Street Capital with a $46.5 million position. Other investors bullish on the company included MD Sass, Renaissance Technologies, and Citadel Investment Group.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Moon Capital. 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 Renaissance Technologies).
Let's also examine hedge fund activity in other stocks similar to Millicom International Cellular S.A. (NASDAQ:TIGO). We will take a look at Knight-Swift Transportation Holdings Inc. (NYSE:KNX), Jefferies Financial Group Inc. (NYSE:JEF), HUYA Inc. (NYSE:HUYA), and Medidata Solutions Inc (NASDAQ:MDSO). All of these stocks' market caps match TIGO's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KNX,23,262916,-10 JEF,34,677810,-1 HUYA,22,237304,1 MDSO,30,534002,14 Average,27.25,428008,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $428 million. That figure was $119 million in TIGO's case. Jefferies Financial Group Inc. (NYSE:JEF) is the most popular stock in this table. On the other hand HUYA Inc. (NYSE:HUYA) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Millicom International Cellular S.A. (NASDAQ:TIGO) is even less popular than HUYA. Hedge funds dodged a bullet by taking a bearish stance towards TIGO. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately TIGO wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); TIGO investors were disappointed as the stock returned -12.6% during the third quarter 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 (view the video below) among hedge funds as many of these stocks already outperformed the market so far in 2019. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.