At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Sonim Technologies, Inc. (NASDAQ:SONM).
Sonim Technologies, Inc. (NASDAQ:SONM) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds’ portfolios at the end of March. At the end of this article we will also compare SONM to other stocks including AutoWeb, Inc. (NASDAQ:AUTO), Sypris Solutions, Inc. (NASDAQ:SYPR), and SPAR Group, Inc. (NASDAQ:SGRP) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 44 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
J. Carlo Cannell of Cannell Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s go over the new hedge fund action regarding Sonim Technologies, Inc. (NASDAQ:SONM).
How have hedgies been trading Sonim Technologies, Inc. (NASDAQ:SONM)?
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 0 hedge funds held shares or bullish call options in SONM a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Nokomis Capital held the most valuable stake in Sonim Technologies, Inc. (NASDAQ:SONM), which was worth $2.6 million at the end of the third quarter. On the second spot was Cannell Capital which amassed $0.5 million worth of shares. Renaissance Technologies was 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 Nokomis Capital allocated the biggest weight to Sonim Technologies, Inc. (NASDAQ:SONM), around 1.24% of its 13F portfolio. Cannell Capital is also relatively very bullish on the stock, dishing out 0.22 percent of its 13F equity portfolio to SONM.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Royce & Associates. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Renaissance Technologies).
Let’s check out hedge fund activity in other stocks similar to Sonim Technologies, Inc. (NASDAQ:SONM). We will take a look at AutoWeb, Inc. (NASDAQ:AUTO), Sypris Solutions, Inc. (NASDAQ:SYPR), SPAR Group, Inc. (NASDAQ:SGRP), and RTW Retailwinds, Inc. (NASDAQ:RTW). All of these stocks’ market caps resemble SONM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AUTO | 2 | 468 | 0 |
| SYPR | 1 | 398 | 0 |
| SGRP | 1 | 59 | 0 |
| RTW | 4 | 583 | 0 |
| Average | 2 | 377 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $3 million in SONM’s case. RTW Retailwinds, Inc. (NASDAQ:RTW) is the most popular stock in this table. On the other hand Sypris Solutions, Inc. (NASDAQ:SYPR) is the least popular one with only 1 bullish hedge fund positions. Sonim Technologies, Inc. (NASDAQ:SONM) is not the most popular stock in this group but hedge fund interest is still above average. 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 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on SONM as the stock returned 45.7% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
