Hedge Funds Have Never Been This Bullish On Iridium Communications Inc. (IRDM)

Is Iridium Communications Inc. (NASDAQ:IRDM) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Iridium Communications Inc. (NASDAQ:IRDM) was in 16 hedge funds’ portfolios at the end of the third quarter of 2019. IRDM investors should be aware of an increase in hedge fund interest in recent months. There were 12 hedge funds in our database with IRDM positions at the end of the previous quarter. Our calculations also showed that IRDM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.


Paul Tudor Jones of Tudor Investment Corp

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s view the new hedge fund action surrounding Iridium Communications Inc. (NASDAQ:IRDM).

Hedge fund activity in Iridium Communications Inc. (NASDAQ:IRDM)

Heading into the fourth quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in IRDM over the last 17 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies holds the largest position in Iridium Communications Inc. (NASDAQ:IRDM). Renaissance Technologies has a $42.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Robert Joseph Caruso of Select Equity Group, with a $28.7 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions consist of Mitch Kuflik and Rob Sobel’s Brahman Capital, Mario Gabelli’s GAMCO Investors and David E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Kerrisdale Capital allocated the biggest weight to Iridium Communications Inc. (NASDAQ:IRDM), around 5.15% of its 13F portfolio. Brahman Capital is also relatively very bullish on the stock, designating 1.48 percent of its 13F equity portfolio to IRDM.

Consequently, specific money managers have jumped into Iridium Communications Inc. (NASDAQ:IRDM) headfirst. Select Equity Group, managed by Robert Joseph Caruso, initiated the biggest position in Iridium Communications Inc. (NASDAQ:IRDM). Select Equity Group had $28.7 million invested in the company at the end of the quarter. Mitch Kuflik and Rob Sobel’s Brahman Capital also initiated a $15.5 million position during the quarter. The other funds with brand new IRDM positions are Sahm Adrangi’s Kerrisdale Capital, Benjamin A. Smith’s Laurion Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s now review hedge fund activity in other stocks similar to Iridium Communications Inc. (NASDAQ:IRDM). We will take a look at MGE Energy, Inc. (NASDAQ:MGEE), GATX Corporation (NYSE:GATX), Cathay General Bancorp (NASDAQ:CATY), and Inphi Corporation (NYSE:IPHI). All of these stocks’ market caps resemble IRDM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MGEE 13 54289 0
GATX 15 214366 2
CATY 17 43998 5
IPHI 30 388332 4
Average 18.75 175246 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $175 million. That figure was $138 million in IRDM’s case. Inphi Corporation (NYSE:IPHI) is the most popular stock in this table. On the other hand MGE Energy, Inc. (NASDAQ:MGEE) is the least popular one with only 13 bullish hedge fund positions. Iridium Communications Inc. (NASDAQ:IRDM) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on IRDM, though not to the same extent, as the stock returned 9.5% during the first two months of the fourth quarter and outperformed the market.

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