The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 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 March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtIDT Corporation (NYSE:IDT) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
IDT Corporation (NYSE:IDT) investors should pay attention to an increase in enthusiasm from smart money in recent months. Our calculations also showed that IDT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_728717" align="aligncenter" width="400"] Roger Ibbotson of Zebra Capital Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now let's take a look at the new hedge fund action surrounding IDT Corporation (NYSE:IDT).
What have hedge funds been doing with IDT Corporation (NYSE:IDT)?
At Q1's end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the fourth quarter of 2019. On the other hand, there were a total of 14 hedge funds with a bullish position in IDT a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Renaissance Technologies has the largest position in IDT Corporation (NYSE:IDT), worth close to $9.7 million, amounting to less than 0.1%% of its total 13F portfolio. On Renaissance Technologies's heels is D E Shaw, led by D. E. Shaw, holding a $3.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism contain , David Harding's Winton Capital Management and John Overdeck and David Siegel's Two Sigma Advisors. In terms of the portfolio weights assigned to each position Kahn Brothers allocated the biggest weight to IDT Corporation (NYSE:IDT), around 0.69% of its 13F portfolio. Zebra Capital Management is also relatively very bullish on the stock, earmarking 0.11 percent of its 13F equity portfolio to IDT.
Now, specific money managers were leading the bulls' herd. Zebra Capital Management, managed by Roger Ibbotson, assembled the biggest position in IDT Corporation (NYSE:IDT). Zebra Capital Management had $0.1 million invested in the company at the end of the quarter.
Let's check out hedge fund activity in other stocks similar to IDT Corporation (NYSE:IDT). We will take a look at Rocky Brands, Inc. (NASDAQ:RCKY), Collectors Universe, Inc. (NASDAQ:CLCT), Cambium Networks Corporation (NASDAQ:CMBM), and Ohio Valley Banc Corp. (NASDAQ:OVBC). All of these stocks' market caps match IDT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RCKY,9,12139,-3 CLCT,8,26945,-2 CMBM,2,1013,-2 OVBC,1,1244,0 Average,5,10335,-1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $18 million in IDT's case. Rocky Brands, Inc. (NASDAQ:RCKY) is the most popular stock in this table. On the other hand Ohio Valley Banc Corp. (NASDAQ:OVBC) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks IDT Corporation (NYSE:IDT) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on IDT, though not to the same extent, as the stock returned 20.5% in Q2 and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.