With the third-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 fourth quarter. One of these stocks was Millicom International Cellular S.A. (NASDAQ:TIGO).
Is TIGO a good stock to buy now? Hedge fund interest in Millicom International Cellular S.A. (NASDAQ:TIGO) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that TIGO 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). 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 Artisan Partners Asset Management Inc (NYSE:APAM), Glacier Bancorp, Inc. (NASDAQ:GBCI), and Popular Inc (NASDAQ:BPOP) to gather more data points.
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 66 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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. Now we’re going to go over the latest hedge fund action surrounding Millicom International Cellular S.A. (NASDAQ:TIGO).
How are hedge funds trading Millicom International Cellular S.A. (NASDAQ:TIGO)?
At the end of September, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 6 hedge funds held shares or bullish call options in TIGO a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cove Street Capital, managed by Jeffrey Bronchick, holds the biggest position in Millicom International Cellular S.A. (NASDAQ:TIGO). Cove Street Capital has a $29 million position in the stock, comprising 5.5% of its 13F portfolio. Sitting at the No. 2 spot is GAMCO Investors, led by Mario Gabelli, holding a $21.7 million position; 0.2% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions consist of Renaissance Technologies, Israel Englander’s Millennium Management and Michael Gelband’s ExodusPoint Capital. In terms of the portfolio weights assigned to each position Cove Street Capital allocated the biggest weight to Millicom International Cellular S.A. (NASDAQ:TIGO), around 5.49% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, designating 0.24 percent of its 13F equity portfolio to TIGO.
Judging by the fact that Millicom International Cellular S.A. (NASDAQ:TIGO) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there is a sect of hedgies who were dropping their entire stakes last quarter. It’s worth mentioning that John W. Moon’s Moon Capital said goodbye to the largest position of the 750 funds followed by Insider Monkey, valued at about $2.7 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also said goodbye to its stock, about $0.7 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Millicom International Cellular S.A. (NASDAQ:TIGO) but similarly valued. These stocks are Artisan Partners Asset Management Inc (NYSE:APAM), Glacier Bancorp, Inc. (NASDAQ:GBCI), Popular Inc (NASDAQ:BPOP), ACI Worldwide Inc (NASDAQ:ACIW), RBC Bearings Incorporated (NASDAQ:ROLL), SLM Corp (NASDAQ:SLM), and Installed Building Products Inc (NYSE:IBP). All of these stocks’ market caps are similar to TIGO’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.7 hedge funds with bullish positions and the average amount invested in these stocks was $301 million. That figure was $60 million in TIGO’s case. Popular Inc (NASDAQ:BPOP) is the most popular stock in this table. On the other hand RBC Bearings Incorporated (NASDAQ:ROLL) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Millicom International Cellular S.A. (NASDAQ:TIGO) is even less popular than ROLL. Our overall hedge fund sentiment score for TIGO is 35. 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. Hedge funds clearly dropped the ball on TIGO as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. A small number of hedge funds were also right about betting on TIGO as the stock returned 35% since Q3 (through December 2nd) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.