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Hedge Funds Have Never Been This Bullish On Intelsat S.A. (I)

Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 2.6% in the first two months of the second quarter. Ten out of 11 industry groups in the S&P 500 Index lost value in May. The average return of a randomly picked stock in the index was even worse (-3.6%). This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 20 most popular S&P 500 stocks among hedge funds not only generated positive returns but also outperformed the index by about 3 percentage points through May 30th. In this article, we will take a look at what hedge funds think about Intelsat S.A. (NYSE:I).

Intelsat S.A. (NYSE:I) was in 54 hedge funds’ portfolios at the end of March. I investors should be aware of an increase in enthusiasm from smart money recently. There were 42 hedge funds in our database with I positions at the end of the previous quarter. Our calculations also showed that I isn’t among the 30 most popular stocks among hedge funds.

At the moment there are a lot of metrics market participants can use to assess stocks. Two of the less known metrics are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the top hedge fund managers can beat the S&P 500 by a solid amount (see the details here).

Sahm Adrangi Kerrisdale Capital

Let’s analyze the fresh hedge fund action surrounding Intelsat S.A. (NYSE:I).

Hedge fund activity in Intelsat S.A. (NYSE:I)

At the end of the first quarter, a total of 54 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards I over the last 15 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

I_june2019

Among these funds, Silver Lake Partners held the most valuable stake in Intelsat S.A. (NYSE:I), which was worth $193.9 million at the end of the first quarter. On the second spot was Discovery Capital Management which amassed $95.5 million worth of shares. Moreover, Point State Capital, Citadel Investment Group, and Kerrisdale Capital were also bullish on Intelsat S.A. (NYSE:I), allocating a large percentage of their portfolios to this stock.

Now, key money managers have jumped into Intelsat S.A. (NYSE:I) headfirst. Melqart Asset Management, managed by Michel Massoud, established the largest call position in Intelsat S.A. (NYSE:I). Melqart Asset Management had $19.3 million invested in the company at the end of the quarter. Aaron Cowen’s Suvretta Capital Management also made a $10.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Scott Bessent’s Key Square Capital Management, Matthew Mark’s Jet Capital Investors, and David Rosen’s Rubric Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Intelsat S.A. (NYSE:I). We will take a look at InterDigital, Inc. (NASDAQ:IDCC), Mantech International Corp (NASDAQ:MANT), Lithia Motors Inc (NYSE:LAD), and GCP Applied Technologies Inc. (NYSE:GCP). This group of stocks’ market values match I’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IDCC 16 172766 -5
MANT 12 16915 2
LAD 17 536544 -3
GCP 26 539333 10
Average 17.75 316390 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $316 million. That figure was $734 million in I’s case. GCP Applied Technologies Inc. (NYSE:GCP) is the most popular stock in this table. On the other hand Mantech International Corp (NASDAQ:MANT) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Intelsat S.A. (NYSE:I) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on I as the stock returned 17.8% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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