At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Ideanomics, Inc. (NASDAQ:IDEX).
Is Ideanomics, Inc. (NASDAQ:IDEX) undervalued? Prominent investors are becoming more confident. The number of long hedge fund positions moved up by 1 recently. Our calculations also showed that IDEX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). IDEX was in 3 hedge funds’ portfolios at the end of March. There were 2 hedge funds in our database with IDEX holdings at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most stock holders, hedge funds are viewed as worthless, outdated investment vehicles of the past. While there are more than 8000 funds trading today, Our researchers look at the top tier of this group, about 850 funds. These investment experts shepherd bulk of the hedge fund industry’s total capital, and by shadowing their best investments, Insider Monkey has found many investment strategies that have historically outpaced the broader indices. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Israel Englander of Millennium Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the recent hedge fund action encompassing Ideanomics, Inc. (NASDAQ:IDEX).
How are hedge funds trading Ideanomics, Inc. (NASDAQ:IDEX)?
At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the fourth quarter of 2019. On the other hand, there were a total of 1 hedge funds with a bullish position in IDEX a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Millennium Management, managed by Israel Englander, holds the number one position in Ideanomics, Inc. (NASDAQ:IDEX). Millennium Management has a $0.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which holds a $0.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position ExodusPoint Capital allocated the biggest weight to Ideanomics, Inc. (NASDAQ:IDEX), around 0.0036% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, designating 0.0012 percent of its 13F equity portfolio to IDEX.
Consequently, specific money managers have jumped into Ideanomics, Inc. (NASDAQ:IDEX) headfirst. Millennium Management, managed by Israel Englander, created the most valuable position in Ideanomics, Inc. (NASDAQ:IDEX). Millennium Management had $0.5 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $0.1 million investment in the stock during the quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Ideanomics, Inc. (NASDAQ:IDEX) but similarly valued. We will take a look at Sterling Bancorp, Inc. (NASDAQ:SBT), Franklin Covey Co. (NYSE:FC), Tuscan Holdings Corp. II (NASDAQ:THCA), and Garrett Motion Inc. (NYSE:GTX). This group of stocks’ market valuations match IDEX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SBT | 9 | 2757 | -3 |
| FC | 13 | 15115 | 2 |
| THCA | 9 | 31456 | 0 |
| GTX | 21 | 82421 | -17 |
| Average | 13 | 32937 | -4.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $1 million in IDEX’s case. Garrett Motion Inc. (NYSE:GTX) is the most popular stock in this table. On the other hand Sterling Bancorp, Inc. (NASDAQ:SBT) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Ideanomics, Inc. (NASDAQ:IDEX) is even less popular than SBT. Hedge funds dodged a bullet by taking a bearish stance towards IDEX. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but managed to beat the market by 15.6 percentage points. Unfortunately IDEX wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); IDEX investors were disappointed as the stock returned -68.7% during the second quarter (through May 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.
