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Is Intelsat S.A. (I) A Good Stock To Buy?

Reymerlyn Martin

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 28, so let’s proceed with the discussion of the hedge fund sentiment on Intelsat S.A. (NYSE:I).

Intelsat S.A. (NYSE:I) shareholders have witnessed a decrease in hedge fund sentiment lately. I was in 42 hedge funds' portfolios at the end of the second quarter of 2019. There were 54 hedge funds in our database with I positions at the end of the previous quarter. Our calculations also showed that I isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Discovery Capital Management

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, 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 analyze the latest hedge fund action surrounding Intelsat S.A. (NYSE:I).

What does smart money think about Intelsat S.A. (NYSE:I)?

Heading into the third quarter of 2019, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards I over the last 16 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

I_oct2019

Of the funds tracked by Insider Monkey, Jim Davidson, Dave Roux and Glenn Hutchins's Silver Lake Partners has the largest position in Intelsat S.A. (NYSE:I), worth close to $231.4 million, corresponding to 5.7% of its total 13F portfolio. Sitting at the No. 2 spot is Rob Citrone of Discovery Capital Management, with a $114.9 million position; 11% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism consist of Zach Schreiber's Point State Capital, Ken Griffin's Citadel Investment Group and Sahm Adrangi's Kerrisdale Capital.

Judging by the fact that Intelsat S.A. (NYSE:I) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there were a few fund managers who sold off their positions entirely heading into Q3. Interestingly, Carl Tiedemann and Michael Tiedemann's TIG Advisors dumped the largest investment of all the hedgies monitored by Insider Monkey, totaling about $31.6 million in stock. Jacob Doft's fund, Highline Capital Management, also dumped its stock, about $12.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 12 funds heading into Q3.

Let's check out hedge fund activity in other stocks similar to Intelsat S.A. (NYSE:I). We will take a look at Cimpress NV (NASDAQ:CMPR), Brooks Automation, Inc. (NASDAQ:BRKS), Valmont Industries, Inc. (NYSE:VMI), and GATX Corporation (NYSE:GATX). This group of stocks' market values resemble I's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CMPR,12,495773,1 BRKS,13,108740,4 VMI,25,294997,6 GATX,13,224982,2 Average,15.75,281123,3.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $281 million. That figure was $840 million in I's case. Valmont Industries, Inc. (NYSE:VMI) is the most popular stock in this table. On the other hand Cimpress NV (NASDAQ:CMPR) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Intelsat S.A. (NYSE:I) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on I as the stock returned 17.2% during Q3 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

Disclosure: None. This article was originally published at Insider Monkey.

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