Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Inseego Corp. (NASDAQ:INSG).
Is INSG a good stock to buy now? Investors who are in the know were buying. The number of bullish hedge fund bets improved by 2 recently. Inseego Corp. (NASDAQ:INSG) was in 11 hedge funds' portfolios at the end of September. The all time high for this statistics is 15. Our calculations also showed that INSG 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.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
TUDOR INVESTMENT CORP
Paul Tudor Jones of Tudor Investment Corp
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 we're going to view the new hedge fund action encompassing Inseego Corp. (NASDAQ:INSG).
Do Hedge Funds Think INSG Is A Good Stock To Buy Now?
At Q3's end, 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 INSG over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mark Coe's Intrinsic Edge Capital has the biggest position in Inseego Corp. (NASDAQ:INSG), worth close to $5.8 million, corresponding to 0.4% of its total 13F portfolio. The second largest stake is held by Masters Capital Management, managed by Mike Masters, which holds a $5.2 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions encompass D. E. Shaw's D E Shaw, and Daniel S. Och's OZ Management. In terms of the portfolio weights assigned to each position Intrinsic Edge Capital allocated the biggest weight to Inseego Corp. (NASDAQ:INSG), around 0.39% of its 13F portfolio. Masters Capital Management is also relatively very bullish on the stock, designating 0.34 percent of its 13F equity portfolio to INSG.
Consequently, some big names were breaking ground themselves. Intrinsic Edge Capital, managed by Mark Coe, assembled the most valuable position in Inseego Corp. (NASDAQ:INSG). Intrinsic Edge Capital had $5.8 million invested in the company at the end of the quarter. Mike Masters's Masters Capital Management also made a $5.2 million investment in the stock during the quarter. The other funds with new positions in the stock are Qing Li's Sciencast Management and Paul Tudor Jones's Tudor Investment Corp.
Let's now review hedge fund activity in other stocks similar to Inseego Corp. (NASDAQ:INSG). We will take a look at Adverum Biotechnologies, Inc. (NASDAQ:ADVM), New Frontier Health Corporation (NYSE:NFH), Yalla Group Limited (NYSE:YALA), Xenia Hotels & Resorts Inc (NYSE:XHR), Cornerstone Building Brands, Inc. (NYSE:CNR), Standard Motor Products, Inc. (NYSE:SMP), and Gravity Co., LTD. (NASDAQ:GRVY). This group of stocks' market caps match INSG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ADVM,30,413121,5 NFH,15,170005,0 YALA,7,21747,7 XHR,9,29036,-1 CNR,22,84894,3 SMP,19,86241,4 GRVY,3,7704,-1 Average,15,116107,2.4 [/table]
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $116 million. That figure was $20 million in INSG's case. Adverum Biotechnologies, Inc. (NASDAQ:ADVM) is the most popular stock in this table. On the other hand Gravity Co., LTD. (NASDAQ:GRVY) is the least popular one with only 3 bullish hedge fund positions. Inseego Corp. (NASDAQ:INSG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for INSG is 43.8. 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. 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 still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on INSG as the stock returned 13% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
