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Sequans Communications SA ADR (SQNS): Hedge Funds Are Nibbling

Debasis Saha

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at 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. In this article we look at what those investors think of Sequans Communications SA ADR (NYSE:SQNS).

Sequans Communications SA ADR (NYSE:SQNS) was in 5 hedge funds' portfolios at the end of the first quarter of 2020. SQNS shareholders have witnessed an increase in support from the world's most elite money managers recently. There were 4 hedge funds in our database with SQNS positions at the end of the previous quarter. Our calculations also showed that SQNS 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.

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 monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

[caption id="attachment_258236" align="aligncenter" width="400"] Ken Griffin of Citadel Investment Group[/caption]

Ken Griffin

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we're going to analyze the recent hedge fund action encompassing Sequans Communications SA ADR (NYSE:SQNS).

What have hedge funds been doing with Sequans Communications SA ADR (NYSE:SQNS)?

At the end of the first quarter, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the previous quarter. By comparison, 4 hedge funds held shares or bullish call options in SQNS a year ago. With hedge funds' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Is SQNS A Good Stock To Buy?

Among these funds, Nokomis Capital held the most valuable stake in Sequans Communications SA ADR (NYSE:SQNS), which was worth $9.8 million at the end of the third quarter. On the second spot was Divisar Capital which amassed $6.6 million worth of shares. Yiheng Capital, Manatuck Hill Partners, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Nokomis Capital allocated the biggest weight to Sequans Communications SA ADR (NYSE:SQNS), around 4.69% of its 13F portfolio. Divisar Capital is also relatively very bullish on the stock, earmarking 2.59 percent of its 13F equity portfolio to SQNS.

Now, some big names were breaking ground themselves. Manatuck Hill Partners, managed by Mark Broach, established the largest position in Sequans Communications SA ADR (NYSE:SQNS). Manatuck Hill Partners had $1.1 million invested in the company at the end of the quarter.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Sequans Communications SA ADR (NYSE:SQNS) but similarly valued. We will take a look at NeuBase Therapeutics, Inc. (NASDAQ:NBSE), Fang Holdings Limited (NYSE:SFUN), Evelo Biosciences, Inc. (NASDAQ:EVLO), and County Bancorp, Inc. (NASDAQ:ICBK). This group of stocks' market caps are similar to SQNS's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NBSE,5,16563,-1 SFUN,4,882,-2 EVLO,3,185,0 ICBK,5,8535,-2 Average,4.25,6541,-1.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.25 hedge funds with bullish positions and the average amount invested in these stocks was $7 million. That figure was $21 million in SQNS's case. NeuBase Therapeutics, Inc. (NASDAQ:NBSE) is the most popular stock in this table. On the other hand Evelo Biosciences, Inc. (NASDAQ:EVLO) is the least popular one with only 3 bullish hedge fund positions. Sequans Communications SA ADR (NYSE:SQNS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 8.3% in 2020 through the end of May but beat the market by 13.2 percentage points. Unfortunately SQNS wasn't nearly as popular as these 10 stocks and hedge funds that were betting on SQNS were disappointed as the stock returned 0.6% during the same time 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 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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

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