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Here’s What Hedge Funds Think About Comtech Telecommunications Corp. (CMTL)

With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter. One of these stocks was Comtech Telecommunications Corp. (NASDAQ:CMTL).

Comtech Telecommunications Corp. (NASDAQ:CMTL) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 14 hedge funds’ portfolios at the end of the fourth quarter of 2018. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Aurinia Pharmaceuticals Inc (NASDAQ:AUPH), ViewRay, Inc. (NASDAQ:VRAY), and Forestar Group Inc. (NYSE:FOR) to gather more data points.

In the eyes of most market participants, hedge funds are perceived as worthless, old financial vehicles of yesteryear. While there are more than 8000 funds in operation at the moment, Our researchers look at the bigwigs of this group, around 750 funds. These hedge fund managers control the majority of the hedge fund industry’s total asset base, and by paying attention to their inimitable equity investments, Insider Monkey has come up with a few investment strategies that have historically surpassed the broader indices. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by nearly 5 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.

Joe Huber - Huber Capital Management

Let’s check out the new hedge fund action encompassing Comtech Telecommunications Corp. (NASDAQ:CMTL).

What does the smart money think about Comtech Telecommunications Corp. (NASDAQ:CMTL)?

At Q4’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in CMTL a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

CMTL_may2019

The largest stake in Comtech Telecommunications Corp. (NASDAQ:CMTL) was held by Huber Capital Management, which reported holding $44 million worth of stock at the end of December. It was followed by Royce & Associates with a $22 million position. Other investors bullish on the company included Renaissance Technologies, Marshall Wace LLP, and Winton Capital Management.

Seeing as Comtech Telecommunications Corp. (NASDAQ:CMTL) has faced bearish sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of money managers who were dropping their full holdings last quarter. At the top of the heap, Josh Goldberg’s G2 Investment Partners Management said goodbye to the largest investment of all the hedgies watched by Insider Monkey, totaling close to $6.1 million in call options, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund said goodbye to about $5.1 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Comtech Telecommunications Corp. (NASDAQ:CMTL) but similarly valued. We will take a look at Aurinia Pharmaceuticals Inc (NASDAQ:AUPH), ViewRay, Inc. (NASDAQ:VRAY), Forestar Group Inc. (NYSE:FOR), and Echo Global Logistics, Inc. (NASDAQ:ECHO). This group of stocks’ market valuations are closest to CMTL’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AUPH 8 36467 2
VRAY 21 177852 -2
FOR 6 57047 1
ECHO 15 24246 1
Average 12.5 73903 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $74 million. That figure was $98 million in CMTL’s case. ViewRay, Inc. (NASDAQ:VRAY) is the most popular stock in this table. On the other hand Forestar Group Inc. (NYSE:FOR) is the least popular one with only 6 bullish hedge fund positions. Comtech Telecommunications Corp. (NASDAQ:CMTL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately CMTL wasn’t nearly as popular as these 15 stock and hedge funds that were betting on CMTL were disappointed as the stock returned -3.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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

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