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Do Hedge Funds Love IntelliPharmaCeutics International Inc. (I)?

Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.

Intelsat SA. (NYSE:I) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 11 hedge funds’ portfolios at the end of the third quarter of 2015. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Atrion Corporation (NASDAQ:ATRI), McGrath RentCorp (NASDAQ:MGRC), and DHT Holdings Inc (NYSE:DHT) to gather more data points.

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In the eyes of most stock holders, hedge funds are assumed to be worthless, outdated investment vehicles of years past. While there are more than 8000 funds in operation at present, Our researchers choose to focus on the masters of this club, about 700 funds. These investment experts manage most of the smart money’s total capital, and by tailing their finest investments, Insider Monkey has formulated numerous investment strategies that have historically exceeded the broader indices. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Keeping this in mind, let’s take a gander at the recent action encompassing Intelsat SA (NYSE:I)

What does the smart money think about IntelliPharmaCeutics Intelsat SA (NYSE:I)?

At the Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from one quarter earlier. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Paul J. Isaac’s Arbiter Partners Capital Management has the largest position in Intelsat SA (NYSE:I), worth close to $29.1 million, amounting to 2.9% of its total 13F portfolio. Coming in second is Cyrus Capital Partners, managed by Stephen C. Freidheim, which holds a $10 million position; 1.1% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions contain D. E. Shaw’s D E Shaw, Kevin Michael Ulrich and Anthony Davis’ Anchorage Advisors, and Jim Simons’ Renaissance Technologies.

In addition, there was a specific group of money managers who sold off their full holdings last quarter. At the top of the heap, Mark Weissman, Adam Cohen and David Coleto’s Caspian Capital Partners dumped the largest stake of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $4.1 million in stock, and Marc Majzner’s Clearline Capital was right behind this move, as the fund cut about $2.2 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Intelsat SA (NYSE:I). We will take a look at Atrion Corporation (NASDAQ:ATRI), McGrath RentCorp (NASDAQ:MGRC), DHT Holdings Inc (NYSE:DHT), and On Deck Capital Inc (NYSE:ONDK). This group of stocks’ market values are similar to I’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ATRI 8 31883 1
MGRC 6 12760 -3
DHT 30 266279 -3
ONDK 8 169987 -3

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $120 million, compared to $49 million in I’s case. DHT Holdings Inc (NYSE:DHT) is the most popular stock in this table. On the other hand, McGrath RentCorp (NASDAQ:MGRC) is the least popular one with only 6 bullish hedge fund positions. Intelsat SA (NYSE:I) 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 DHT might be a better candidate to consider a long position.

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