After Straight Path (STRP), is GlobalStar (GSAT) Next in Line for a Buyout?

GlobalStar Inc. (NYSE:GSAT) on April 18 leaped by 9.54% in below-average trading to $1.895, after it became the subject of rumors that it might be the next target of an acquisition.

Benjamin Rains of Zacks speculated that after AT&T bought Straight Path Communications Inc. (NYSE:STRP) in a $1.6 billion deal, other tech giants like Verizon or T-Mobile might see GlobalStar Inc. (NYSE:GSAT) as an acquisition target to match AT&T’s new toy.

“GlobalStar’s major Monday push might have ended earlier than expected, but its stock has the potential for future gains, as a buyout is still very possible based on the company’s relatively niche offerings,” Rains said.

Meanwhile, the FCC most recently permitted GlobalStar to provide terrestrial services on top of its satellite communications services. The ruling paves the way for GlobalStar to tap on its capacity to support small cells, a product which Verizon is an advocate of, The Street said in a report.

Straight Path Communications Inc. (NYSE:STRP) leaped by 16.92% in heavy trading to $107.22.

Leonardo da/

Leonardo da/

What Does The Smart Money Sentiment Say?

The Smart Money was bearish of GlobalStar Inc. (NYSE:GSAT) as we saw a decline in hedge funds holding shares, quarter over quarter. We saw only 16 funds hold their positions of Global Star valued at $123 million in Q4, a decrease from 18 funds holding GSAT shares valued at $106 million in Q3.

Looking closely at hedge fund movement, we saw Michael Johnston of Steelhead partners decrease its activity by 2% by the end of Q4. Johnston currently holds over 26 million shares of GSAT, valued at $41 million, representing 5.04% of the float.

Meanwhile, hedge funds are bullish of Straight Path Communications Inc. (NYSE:STRP) as we saw a slight increase in funds holding its shares by the end of Q4.

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 39.7% gains over the past 12 months and outperformed the 24.1% gain enjoyed by the S&P 500 ETFs. Our enhanced small-cap hedge fund strategy returned more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points over the last 4.5 years (see details here).

The Bottom Line

GlobalStar Inc. (NYSE:GSAT) is in the spotlight today as speculations roam about the company being a possible target of a buyout by communications giants like Verizon or T-Mobile to match AT&T’s newly-acquired Straight Path Communications. For further reading, here are 10 biggest tech acquisitions in the world.

Follow Globalstar Inc. (NYSEMKT:GSAT)

Follow Straight Path Communications Inc. (NYSEMKT:STRP)