While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, declining oil prices and the trade war with China, many smart money investors kept their optimism regarding the current bull run in the fourth quarter, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Intelsat S.A. (NYSE:I).
Is Intelsat S.A. (NYSE:I) the right investment to pursue these days? The smart money is becoming hopeful. The number of long hedge fund positions increased by 5 in recent months. Our calculations also showed that I isn't among the 30 most popular stocks among hedge funds. I was in 42 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 37 hedge funds in our database with I positions at the end of the previous quarter.
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 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 review the new hedge fund action regarding Intelsat S.A. (NYSE:I).
Hedge fund activity in Intelsat S.A. (NYSE:I)
At Q4's end, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in I over the last 14 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Jim Davidson, Dave Roux and Glenn Hutchins's Silver Lake Partners has the biggest position in Intelsat S.A. (NYSE:I), worth close to $264.8 million, comprising 6.5% of its total 13F portfolio. The second most bullish fund manager is Discovery Capital Management, led by Rob Citrone, holding a $139.2 million position; the fund has 11.6% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions encompass Zach Schreiber's Point State Capital, Ken Griffin's Citadel Investment Group and Michael A. Price and Amos Meron's Empyrean Capital Partners.
With a general bullishness amongst the heavyweights, some big names were leading the bulls' herd. Highline Capital Management, managed by Jacob Doft, created the most outsized position in Intelsat S.A. (NYSE:I). Highline Capital Management had $32.3 million invested in the company at the end of the quarter. Jeffrey Talpins's Element Capital Management also made a $15.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Israel Englander's Millennium Management, Andrew Sandler's Sandler Capital Management, and Christopher Pucillo's Solus Alternative Asset Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Intelsat S.A. (NYSE:I) but similarly valued. We will take a look at NorthWestern Corporation (NYSE:NWE), Intercept Pharmaceuticals Inc (NASDAQ:ICPT), China Biologic Products Inc (NASDAQ:CBPO), and International Game Technology PLC (NYSE:IGT). This group of stocks' market values are closest to I's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NWE,15,160177,0 ICPT,21,150563,2 CBPO,7,113217,-1 IGT,34,590006,-3 Average,19.25,253491,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $253 million. That figure was $947 million in I's case. International Game Technology PLC (NYSE:IGT) is the most popular stock in this table. On the other hand China Biologic Products Inc (NASDAQ:CBPO) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Intelsat S.A. (NYSE:I) 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 I wasn't nearly as popular as these 15 stock and hedge funds that were betting on I were disappointed as the stock returned -10.4% 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.