At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
In this article, we’ll take a closer look at Globalstar, Inc. (PINK:GSAT), which registered a decline in hedge fund sentiment last quarter. At the end of September, 18 funds from our database held shares of the company. However, 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 La Quinta Holdings Inc (NYSE:LQ), Apollo Investment Corp. (NASDAQ:AINV), and WestAmerica Bancorp. (NASDAQ:WABC) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Keeping this in mind, we’re going to take a glance at the recent action surrounding Globalstar, Inc. (PINK:GSAT).
How have hedgies been trading Globalstar, Inc. (PINK:GSAT)?
At the end of the third quarter, 18 funds tracked by Insider Monkey held long positions in this stock, down by two funds from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in GSAT at the beginning of this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Michael Johnston’s Steelhead Partners holds the number one position in Globalstar, Inc. (PINK:GSAT) which has a $32.4 million position in the stock, comprising 3.2% of its 13F portfolio. The second largest stake is held by James Dinan’s York Capital Management holding a $17.6 million position. Some other peers that are bullish encompass Mark Weissman, Adam Cohen and David Coleto’s Caspian Capital Partners, D. E. Shaw’s D E Shaw and Matthew Mark’s Jet Capital Investors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Since Globalstar, Inc. (PINK:GSAT) has encountered declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of fund managers who sold off their entire stakes last quarter. Interestingly, Buckley Ratchford’s Wingspan Investment Management sold off the biggest investment of the 700 funds tracked by Insider Monkey, worth close to $0.4 million in call options, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dropped about $0.3 million worth of shares.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Globalstar, Inc. (PINK:GSAT) but similarly valued. We will take a look at La Quinta Holdings Inc (NYSE:LQ), Apollo Investment Corp. (NASDAQ:AINV), WestAmerica Bancorp. (NASDAQ:WABC), and Huron Consulting Group (NASDAQ:HURN). This group of stocks’ market values match GSAT’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 11 funds with bullish positions and the average amount invested in these stocks was $71 million, versus $107 million in GSAT’s case. La Quinta Holdings Inc (NYSE:LQ) is the most popular stock in this table. On the other hand WestAmerica Bancorp. (NASDAQ:WABC) is the least popular one with only six funds holding shares. Compared to these stocks Globalstar, Inc. (PINK:GSAT) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.