In this article we will check out the progression of hedge fund sentiment towards Ingevity Corporation (NYSE:NGVT) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Ingevity Corporation (NYSE:NGVT) undervalued? Money managers were buying. The number of bullish hedge fund bets moved up by 3 in recent months. Ingevity Corporation (NYSE:NGVT) was in 24 hedge funds’ portfolios at the end of September. The all time high for this statistic is 31. Our calculations also showed that NGVT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Jeffrey Ubben, Founder of ValueAct Capital and Inclusive Capital Partners
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. Keeping this in mind let’s take a glance at the latest hedge fund action surrounding Ingevity Corporation (NYSE:NGVT).
Do Hedge Funds Think NGVT Is A Good Stock To Buy Now?
At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from one quarter earlier. By comparison, 28 hedge funds held shares or bullish call options in NGVT a year ago. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in Ingevity Corporation (NYSE:NGVT) was held by Broad Bay Capital, which reported holding $67 million worth of stock at the end of September. It was followed by Inclusive Capital with a $55.3 million position. Other investors bullish on the company included Maple Rock Capital, D E Shaw, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Broad Bay Capital allocated the biggest weight to Ingevity Corporation (NYSE:NGVT), around 8.3% of its 13F portfolio. Ararat Capital is also relatively very bullish on the stock, dishing out 8.01 percent of its 13F equity portfolio to NGVT.
As aggregate interest increased, specific money managers have been driving this bullishness. Tudor Investment Corp, managed by Paul Tudor Jones, initiated the most valuable position in Ingevity Corporation (NYSE:NGVT). Tudor Investment Corp had $1.6 million invested in the company at the end of the quarter. Mika Toikka’s AlphaCrest Capital Management also made a $1.1 million investment in the stock during the quarter. The following funds were also among the new NGVT investors: Greg Eisner’s Engineers Gate Manager, Matthew Hulsizer’s PEAK6 Capital Management, and Peter Muller’s PDT Partners.
Let’s now review hedge fund activity in other stocks similar to Ingevity Corporation (NYSE:NGVT). These stocks are Main Street Capital Corporation (NYSE:MAIN), Spirit Airlines Incorporated (NASDAQ:SAVE), Old National Bancorp (NYSE:ONB), Prestige Consumer Healthcare Inc. (NYSE:PBH), Editas Medicine, Inc. (NASDAQ:EDIT), Accolade, Inc. (NASDAQ:ACCD), and LendingClub Corp (NYSE:LC). This group of stocks’ market caps match NGVT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MAIN | 5 | 26110 | -3 |
| SAVE | 21 | 169048 | -8 |
| ONB | 12 | 64096 | -3 |
| PBH | 18 | 138191 | 5 |
| EDIT | 22 | 336029 | -1 |
| ACCD | 28 | 482430 | 4 |
| LC | 25 | 437384 | 2 |
| Average | 18.7 | 236184 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.7 hedge funds with bullish positions and the average amount invested in these stocks was $236 million. That figure was $302 million in NGVT’s case. Accolade, Inc. (NASDAQ:ACCD) is the most popular stock in this table. On the other hand Main Street Capital Corporation (NYSE:MAIN) is the least popular one with only 5 bullish hedge fund positions. Ingevity Corporation (NYSE:NGVT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NGVT is 72.5. 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 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately NGVT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NGVT were disappointed as the stock returned 7% since the end of September (through 12/9) 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 many of these stocks already outperformed the market since 2019.
Follow Ingevity Corp (NYSE:NGVT)
Follow Ingevity Corp (NYSE:NGVT)
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Disclosure: None. This article was originally published at Insider Monkey.
