Should You Buy Teligent Inc (TLGT)?

The successful funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Teligent Inc (NASDAQ:TLGT) from the perspective of those successful funds.

Hedge fund interest in Teligent Inc (NASDAQ:TLGT) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare TLGT to other stocks including Gold Resource Corporation (NYSEAMEX:GORO), Neuroderm Ltd (NASDAQ:NDRM), and Resolute Energy Corp (NYSE:REN) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Now, let’s go over the recent action encompassing Teligent Inc (NASDAQ:TLGT).

What have hedge funds been doing with Teligent Inc (NASDAQ:TLGT)?

At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards TLGT over the last 5 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Broadfin Capital, led by Kevin Kotler, holds the biggest position in Teligent Inc (NASDAQ:TLGT). According to regulatory filings, the fund has a $16.7 million position in the stock, comprising 1.5% of its 13F portfolio. On Broadfin Capital’s heels is venBio Select Advisor, led by Behzad Aghazadeh, which holds a $12.4 million position; the fund has 2.2% of its 13F portfolio invested in the stock. Other peers that hold long positions comprise Principal Global Investors’s Columbus Circle Investors, Philip Hempleman’s Ardsley Partners and D E Shaw, one of the largest hedge funds in the world. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

We already know that not all hedge funds are bullish on Teligent Inc (NASDAQ:TLGT) and that some hedge funds actually got rid of their positions entirely. At the top of the heap, Charles Jobson’s Delta Partners dumped the biggest stake of all the hedgies watched by Insider Monkey, valued at about $1.9 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dumped about $0.1 million worth of TLGT shares.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Teligent Inc (NASDAQ:TLGT) but similarly valued. These stocks are Gold Resource Corporation (NYSEAMEX:GORO), Neuroderm Ltd (NASDAQ:NDRM), Resolute Energy Corp (NYSE:REN), and CU Bancorp (NASDAQ:CUNB). This group of stocks’ market values are similar to TLGT’s market value.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $31 million in TLGT’s case. Neuroderm Ltd (NASDAQ:NDRM) is the most popular stock in this table. On the other hand Gold Resource Corporation (NYSEAMEX:GORO) is the least popular one with only 6 bullish hedge fund positions. Teligent Inc (NASDAQ:TLGT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard NDRM might be a better candidate to consider taking a long position in.

Disclosure: none.