Is GSAT A Good Stock To Buy Now?

In this article you are going to find out whether hedge funds think Globalstar, Inc. (NYSE:GSAT) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is GSAT a good stock to buy now? Globalstar, Inc. (NYSE:GSAT) has experienced an increase in support from the world’s most elite money managers of late. Globalstar, Inc. (NYSE:GSAT) was in 11 hedge funds’ portfolios at the end of September. The all time high for this statistics is 24. There were 9 hedge funds in our database with GSAT positions at the end of the second quarter. Our calculations also showed that GSAT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Michael Johnston - Steelhead Partners

Michael Johnston of Steelhead Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let’s take a look at the latest hedge fund action surrounding Globalstar, Inc. (NYSE:GSAT).

Do Hedge Funds Think GSAT Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GSAT over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

More specifically, Mudrick Capital Management was the largest shareholder of Globalstar, Inc. (NYSE:GSAT), with a stake worth $30.7 million reported as of the end of September. Trailing Mudrick Capital Management was Steelhead Partners, which amassed a stake valued at $7.8 million. 683 Capital Partners, Legion Partners Asset Management, and MIG 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 Mudrick Capital Management allocated the biggest weight to Globalstar, Inc. (NYSE:GSAT), around 7.94% of its 13F portfolio. Legion Partners Asset Management is also relatively very bullish on the stock, setting aside 0.83 percent of its 13F equity portfolio to GSAT.

Consequently, some big names were leading the bulls’ herd. Paloma Partners, managed by Donald Sussman, created the most outsized position in Globalstar, Inc. (NYSE:GSAT). Paloma Partners had $0.2 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0 million position during the quarter. The only other fund with a new position in the stock is Ken Griffin’s Citadel Investment Group.

Let’s now take a look at hedge fund activity in other stocks similar to Globalstar, Inc. (NYSE:GSAT). We will take a look at FuelCell Energy, Inc. (NASDAQ:FCEL), Maxeon Solar Technologies, Ltd. (NASDAQ:MAXN),, Inc. (NASDAQ:PRTS), Great Southern Bancorp, Inc. (NASDAQ:GSBC), NGL Energy Partners LP (NYSE:NGL), Aprea Therapeutics, Inc. (NASDAQ:APRE), and Berkshire Hills Bancorp, Inc. (NYSE:BHLB). All of these stocks’ market caps match GSAT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FCEL 17 35393 9
MAXN 5 17787 5
PRTS 22 149170 8
GSBC 7 20795 -3
NGL 2 695 -2
APRE 9 132886 -2
BHLB 13 20919 -4
Average 10.7 53949 1.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.7 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $49 million in GSAT’s case., Inc. (NASDAQ:PRTS) is the most popular stock in this table. On the other hand NGL Energy Partners LP (NYSE:NGL) is the least popular one with only 2 bullish hedge fund positions. Globalstar, Inc. (NYSE:GSAT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for GSAT is 43.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and beat the market again by 16.2 percentage points. Unfortunately GSAT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GSAT were disappointed as the stock returned 3.2% since the end of September (through 12/8) 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 many of these stocks already outperformed the market so far this year.

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