Here’s What Hedge Funds Think About ADTRAN, Inc. (ADTN)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of ADTRAN, Inc. (NASDAQ:ADTN) based on that data.

Is ADTRAN, Inc. (NASDAQ:ADTN) a buy, sell, or hold? Hedge funds are buying. The number of bullish hedge fund positions increased by 3 lately. Our calculations also showed that ADTN 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). ADTN was in 16 hedge funds’ portfolios at the end of March. There were 13 hedge funds in our database with ADTN positions at the end of the previous quarter.

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 58 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.

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a glance at the recent hedge fund action encompassing ADTRAN, Inc. (NASDAQ:ADTN).

How have hedgies been trading ADTRAN, Inc. (NASDAQ:ADTN)?

At Q1’s end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ADTN over the last 18 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.

According to Insider Monkey’s hedge fund database, Renaissance Technologies, holds the biggest position in ADTRAN, Inc. (NASDAQ:ADTN). Renaissance Technologies has a $16.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies’s heels is D E Shaw, managed by D. E. Shaw, which holds a $10.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Jeffrey Moskowitz’s Harvey Partners and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Harvey Partners allocated the biggest weight to ADTRAN, Inc. (NASDAQ:ADTN), around 2.81% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, earmarking 0.09 percent of its 13F equity portfolio to ADTN.

As industrywide interest jumped, key hedge funds were breaking ground themselves. Engineers Gate Manager, managed by Greg Eisner, assembled the largest position in ADTRAN, Inc. (NASDAQ:ADTN). Engineers Gate Manager had $0.3 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron’s Algert Coldiron Investors also made a $0.2 million investment in the stock during the quarter. The other funds with brand new ADTN positions are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors and Michael Gelband’s ExodusPoint Capital.

Let’s also examine hedge fund activity in other stocks similar to ADTRAN, Inc. (NASDAQ:ADTN). These stocks are G-III Apparel Group, Ltd. (NASDAQ:GIII), Tejon Ranch Company (NYSE:TRC), Pope Resources, A Delaware Limited Partnership (NASDAQ:POPE), and Avadel Pharmaceuticals plc (NASDAQ:AVDL). All of these stocks’ market caps match ADTN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GIII 17 44550 -2
TRC 11 50064 -3
POPE 5 4629 3
AVDL 16 112713 6
Average 12.25 52989 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $53 million. That figure was $44 million in ADTN’s case. G-III Apparel Group, Ltd. (NASDAQ:GIII) is the most popular stock in this table. On the other hand Pope Resources, A Delaware Limited Partnership (NASDAQ:POPE) is the least popular one with only 5 bullish hedge fund positions. ADTRAN, Inc. (NASDAQ:ADTN) 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 13.3% in 2020 through June 25th but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on ADTN as the stock returned 37.3% in Q2 (through June 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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