Consolidated Communications Holdings Inc (CNSL): Are Hedge Funds Right About This Stock?

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Consolidated Communications Holdings Inc (NASDAQ:CNSL) but similarly valued. These stocks are B2Gold Corp (NYSEMKT:BTG), Investors Real Estate Trust (NYSE:IRET), Fortress Transprtn and Infr Investrs LLC (NYSE:FTAI), and Diamond Foods, Inc. (NASDAQ:DMND). All of these stocks’ market caps resemble CNSL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BTG 9 13939 0
IRET 12 17458 3
FTAI 5 771598 -4
DMND 20 237190 3

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $260 million. That figure was $5 million in CNSL’s case. Diamond Foods, Inc. (NASDAQ:DMND) is the most popular stock in this table. On the other hand Fortress Transprtn and Infr Investrs LLC (NYSE:FTAI) is the least popular one with only 5 bullish hedge fund positions. Consolidated Communications Holdings Inc (NASDAQ:CNSL) 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 DMND might be a better candidate to consider a long position.