Echostar Corporation (SATS): Hedge Funds Receiving a “Sell” Signal

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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Echostar Corporation (NASDAQ:SATS).

Is Echostar Corporation (NASDAQ:SATS) undervalued? Money managers are turning less bullish. The number of long hedge fund bets went down by 2 recently. Our calculations also showed that SATS 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.

To the average investor there are a large number of indicators shareholders put to use to appraise their stock investments. Two of the most under-the-radar indicators are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can trounce the broader indices by a very impressive amount (see the details here).

Nathaniel August - Mangrove Partners

Nathaniel August of Mangrove Partners

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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. Keeping this in mind we’re going to check out the new hedge fund action surrounding Echostar Corporation (NASDAQ:SATS).

How are hedge funds trading Echostar Corporation (NASDAQ:SATS)?

At Q1’s end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from the fourth quarter of 2019. On the other hand, there were a total of 29 hedge funds with a bullish position in SATS a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

The largest stake in Echostar Corporation (NASDAQ:SATS) was held by Renaissance Technologies, which reported holding $118.4 million worth of stock at the end of September. It was followed by Hound Partners with a $106.1 million position. Other investors bullish on the company included Mangrove Partners, Park West Asset Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Red Cedar Management allocated the biggest weight to Echostar Corporation (NASDAQ:SATS), around 13.38% of its 13F portfolio. Hound Partners is also relatively very bullish on the stock, designating 9.9 percent of its 13F equity portfolio to SATS.

Due to the fact that Echostar Corporation (NASDAQ:SATS) has witnessed bearish sentiment from the smart money, logic holds that there is a sect of money managers that decided to sell off their entire stakes last quarter. Intriguingly, David Einhorn’s Greenlight Capital said goodbye to the biggest position of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $29.3 million in stock. Jeffrey Tannenbaum’s fund, Fir Tree, also cut its stock, about $28.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 2 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Echostar Corporation (NASDAQ:SATS) but similarly valued. These stocks are Manpowergroup Inc (NYSE:MAN), Popular Inc (NASDAQ:BPOP), Global Blood Therapeutics Inc (NASDAQ:GBT), and Hexcel Corporation (NYSE:HXL). This group of stocks’ market caps match SATS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MAN 23 244244 -4
BPOP 28 468895 -5
GBT 23 431206 0
HXL 27 187145 -3
Average 25.25 332873 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.25 hedge funds with bullish positions and the average amount invested in these stocks was $333 million. That figure was $429 million in SATS’s case. Popular Inc (NASDAQ:BPOP) is the most popular stock in this table. On the other hand Manpowergroup Inc (NYSE:MAN) is the least popular one with only 23 bullish hedge fund positions. Echostar Corporation (NASDAQ:SATS) 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. 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 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately SATS wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); SATS investors were disappointed as the stock returned 0.4% during the second quarter 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 most of these stocks already outperformed the market in 2020.

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