Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of March. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is NII Holdings, Inc. (NASDAQ:NIHD), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is NII Holdings, Inc. (NASDAQ:NIHD) a buy here? Hedge funds are in a bearish mood. The number of bullish hedge fund positions fell by 4 in recent months. Our calculations also showed that NIHD isn't among the 30 most popular stocks among hedge funds. NIHD was in 14 hedge funds' portfolios at the end of the first quarter of 2019. There were 18 hedge funds in our database with NIHD positions at the end of the previous quarter.
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 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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's analyze the recent hedge fund action surrounding NII Holdings, Inc. (NASDAQ:NIHD).
What have hedge funds been doing with NII Holdings, Inc. (NASDAQ:NIHD)?
At Q1's end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -22% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in NIHD over the last 15 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in NII Holdings, Inc. (NASDAQ:NIHD) was held by 683 Capital Partners, which reported holding $25.8 million worth of stock at the end of March. It was followed by Point State Capital with a $6.5 million position. Other investors bullish on the company included AQR Capital Management, Kavi Asset Management, and Citadel Investment Group.
Because NII Holdings, Inc. (NASDAQ:NIHD) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there were a few hedgies who were dropping their entire stakes last quarter. Intriguingly, Brian Sheehy's Iszo Capital sold off the biggest investment of all the hedgies followed by Insider Monkey, valued at about $10.7 million in stock. Ed Bosek's fund, BeaconLight Capital, also cut its stock, about $6.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 4 funds last quarter.
Let's now review hedge fund activity in other stocks similar to NII Holdings, Inc. (NASDAQ:NIHD). We will take a look at Catasys, Inc. (NASDAQ:CATS), ASA Gold and Precious Metals Ltd (NYSE:ASA), Saga Communications, Inc. (NASDAQ:SGA), and ConforMIS, Inc. (NASDAQ:CFMS). This group of stocks' market caps resemble NIHD's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CATS,6,2276,5 ASA,5,13600,0 SGA,3,26728,1 CFMS,4,36412,-2 Average,4.5,19754,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.5 hedge funds with bullish positions and the average amount invested in these stocks was $20 million. That figure was $41 million in NIHD's case. Catasys, Inc. (NASDAQ:CATS) is the most popular stock in this table. On the other hand Saga Communications, Inc. (NASDAQ:SGA) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks NII Holdings, Inc. (NASDAQ:NIHD) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately NIHD wasn't nearly as popular as these 20 stocks and hedge funds that were betting on NIHD were disappointed as the stock returned -1.5% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.