Hedge Funds Were Selling TeleSystems PJSC (MBT) Before The Coronavirus

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (10 coronavirus predictions).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 835 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Mobile TeleSystems PJSC (NYSE:MBT) in this article.

Mobile TeleSystems PJSC (NYSE:MBT) was in 13 hedge funds’ portfolios at the end of December. MBT investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. There were 14 hedge funds in our database with MBT positions at the end of the previous quarter. Our calculations also showed that MBT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

In the eyes of most investors, hedge funds are perceived as unimportant, outdated investment vehicles of yesteryear. While there are greater than 8000 funds trading today, We hone in on the leaders of this group, around 850 funds. It is estimated that this group of investors handle bulk of the smart money’s total capital, and by tracking their finest picks, Insider Monkey has come up with various investment strategies that have historically exceeded the broader indices. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .


Israel Englander of Millennium Management

We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a gander at the fresh hedge fund action encompassing Mobile TeleSystems PJSC (NYSE:MBT).

What does smart money think about Mobile TeleSystems PJSC (NYSE:MBT)?

At the end of the fourth quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the third quarter of 2019. By comparison, 12 hedge funds held shares or bullish call options in MBT a year ago. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in Mobile TeleSystems PJSC (NYSE:MBT), which was worth $402.1 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $43.4 million worth of shares. Arrowstreet Capital, Millennium Management, and Cheyne Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Cheyne Capital allocated the biggest weight to Mobile TeleSystems PJSC (NYSE:MBT), around 3.31% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.31 percent of its 13F equity portfolio to MBT.

Since Mobile TeleSystems PJSC (NYSE:MBT) has faced bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedgies that elected to cut their positions entirely by the end of the third quarter. Intriguingly, Howard Marks’s Oaktree Capital Management sold off the largest stake of all the hedgies followed by Insider Monkey, worth an estimated $2.4 million in stock. Noam Gottesman’s fund, GLG Partners, also dropped its stock, about $0.8 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Mobile TeleSystems PJSC (NYSE:MBT) but similarly valued. These stocks are WEX Inc (NYSE:WEX), Guidewire Software Inc (NYSE:GWRE), Westlake Chemical Corporation (NYSE:WLK), and Jones Lang LaSalle Inc (NYSE:JLL). This group of stocks’ market caps match MBT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WEX 25 393579 -1
GWRE 32 742137 8
WLK 22 335701 4
JLL 30 1283217 -1
Average 27.25 688659 2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $689 million. That figure was $479 million in MBT’s case. Guidewire Software Inc (NYSE:GWRE) is the most popular stock in this table. On the other hand Westlake Chemical Corporation (NYSE:WLK) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Mobile TeleSystems PJSC (NYSE:MBT) is even less popular than WLK. Hedge funds dodged a bullet by taking a bearish stance towards MBT. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but managed to beat the market by 3.2 percentage points. Unfortunately MBT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); MBT investors were disappointed as the stock returned -29.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in Q1.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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