Did The Smart Money Get The Interpublic Group of Companies Inc (IPG) Right?

Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards The Interpublic Group of Companies Inc (NYSE:IPG) at the end of the third quarter and determine whether the smart money was really smart about this stock.

The Interpublic Group of Companies Inc (NYSE:IPG) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 31 hedge funds’ portfolios at the end of September. Our calculations also showed that IPG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare IPG to other stocks including monday.com Ltd. (NASDAQ:MNDY), Equity Lifestyle Properties, Inc. (NYSE:ELS), and RH (NYSE:RH) to get a better sense of its popularity.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to take a peek at the recent hedge fund action encompassing The Interpublic Group of Companies Inc (NYSE:IPG).

John Rogers of Ariel Investments

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

At Q3’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards IPG over the last 25 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Ariel Investments held the most valuable stake in The Interpublic Group of Companies Inc (NYSE:IPG), which was worth $316.2 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $66.4 million worth of shares. Junto Capital Management, GAMCO Investors, and Pzena Investment Management 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 Zeno Research allocated the biggest weight to The Interpublic Group of Companies Inc (NYSE:IPG), around 4.7% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, setting aside 2.89 percent of its 13F equity portfolio to IPG.

Since The Interpublic Group of Companies Inc (NYSE:IPG) has experienced a decline in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of money managers who sold off their entire stakes by the end of the third quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management said goodbye to the largest stake of all the hedgies followed by Insider Monkey, comprising about $34.4 million in stock. Ben Levine, Andrew Manuel and Stefan Renold’s fund, LMR Partners, also dropped its stock, about $1.2 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as The Interpublic Group of Companies Inc (NYSE:IPG) but similarly valued. These stocks are monday.com Ltd. (NASDAQ:MNDY), Equity Lifestyle Properties, Inc. (NYSE:ELS), RH (NYSE:RH), Evergy, Inc. (NYSE:EVRG), Vedanta Ltd (NYSE:VEDL), SentinelOne, Inc. (NYSE:S), and Cognex Corporation (NASDAQ:CGNX). All of these stocks’ market caps resemble IPG’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 28.7 hedge funds with bullish positions and the average amount invested in these stocks was $1363 million. That figure was $643 million in IPG’s case. RH (NYSE:RH) is the most popular stock in this table. On the other hand Vedanta Ltd (NYSE:VEDL) is the least popular one with only 8 bullish hedge fund positions. The Interpublic Group of Companies Inc (NYSE:IPG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IPG is 52.9. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately, IPG wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on IPG were disappointed as the stock returned -2.3% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.

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