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 Echostar Corporation (NASDAQ:SATS)? The smart money sentiment can provide an answer to this question.
Why do we pay any attention at all to hedge fund sentiment? 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 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to view the key hedge fund action surrounding Echostar Corporation (NASDAQ:SATS).
What does the smart money think about Echostar Corporation (NASDAQ:SATS)?
At Q4's end, a total of 34 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in SATS over the last 14 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Echostar Corporation (NASDAQ:SATS), with a stake worth $108.3 million reported as of the end of September. Trailing Renaissance Technologies was Mangrove Partners, which amassed a stake valued at $56.4 million. Park West Asset Management, Millennium Management, and Greenlight Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Now, key money managers were leading the bulls' herd. Park West Asset Management, managed by Peter S. Park, assembled the biggest position in Echostar Corporation (NASDAQ:SATS). Park West Asset Management had $38.6 million invested in the company at the end of the quarter. David Einhorn's Greenlight Capital also made a $22 million investment in the stock during the quarter. The following funds were also among the new SATS investors: Brett Hendrickson's Nokomis Capital, Frederick DiSanto's Ancora Advisors, and Alexander Charles McAree's Red Cedar Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Echostar Corporation (NASDAQ:SATS) but similarly valued. These stocks are ViaSat, Inc. (NASDAQ:VSAT), Ingevity Corporation (NYSE:NGVT), Umpqua Holdings Corp (NASDAQ:UMPQ), and Wyndham Destinations, Inc. (NYSE:WYND). This group of stocks' market values are similar to SATS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VSAT,19,1763482,1 NGVT,17,123490,-2 UMPQ,20,283820,0 WYND,20,473616,-2 Average,19,661102,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $661 million. That figure was $422 million in SATS's case. Umpqua Holdings Corp (NASDAQ:UMPQ) is the most popular stock in this table. On the other hand Ingevity Corporation (NYSE:NGVT) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Echostar Corporation (NASDAQ:SATS) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately SATS wasn't nearly as popular as these 15 stock and hedge funds that were betting on SATS were disappointed as the stock returned 8.8% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.