Is Sequans Communications (SQNS) A Smart Long-Term Buy?

Roubaix Capital LLC, an investment management firm, published its ‘Roubaix Fund Composite’ fourth-quarter 2020 Investor Letter – a copy of which can be downloaded here. A net return of 26.63% was recorded by the fund for the Q4 of 2020, outperforming its HFRI Equity Hedge benchmark that delivered a 14.50% return but below its Russell 2000 index that had a 31.37% return. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Roubaix Capital, in their Q4 2020 Investor Letter, said that Sequans Communications S.A. (NYSE: SQNS) could be a strong beneficiary from the demand of consumers for high speed data. Sequans Communications S.A. is a fabless mobile phone technology company that currently has a $253.1 million market cap. For the past 3 months, SQNS delivered an impressive 83.50% return and settled at $7.56 per share at the closing of February 16th.

Here is what Roubaix Capital has to say about Sequans Communications S.A. in their Q4 2020 investor letter:

“As was the case during 2020, we expect our returns to be driven by the breadth of our positions. While Anterix offers a unique investment that will benefit primarily from utilities creating private high speed data networks, demand for high speed data is clearly a much larger, and dare say ubiquitous, trend that will be evident in the years ahead. There are many ways to invest behind this, but in small cap equities we see Sequans (SQNS) as a particularly strong beneficiary. For years, the company has focused on developing the semiconductor technology that is uniquely suited to enabling these networks. Specifically, Sequans chips use less power and are lower cost, two basic parameters that differentiate their products from more expensive and power-hungry chip architecture that is rooted in the current PC and handset markets. The end markets Sequans is focused on are expected to grow over 40% and the company anticipates rising market share. The company’s growth this year will take profitability to break-even levels and they see a roadmap to over 20% operating margins as revenues scale over the medium term. The company’s goals would imply an earnings rate nearing $1.00 in 2023, which, if achieved, would drive the stock materially higher.”

Last November, we published an article telling that Sequans Communications S.A. (NYSE: SQNS) shares was flat at the end of last quarter. SQNS delivered a 6.18% return in the past 12 months.

Our calculations show that Sequans Communications S.A. (NYSE: SQNS) does not belong in our list of the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

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