We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (read our latest 10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s take a look at whether Interactive Brokers Group, Inc. (NASDAQ:IBKR) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Interactive Brokers Group, Inc. (NASDAQ:IBKR) an exceptional investment right now? The best stock pickers are getting more bullish. The number of bullish hedge fund positions inched up by 4 recently. Our calculations also showed that IBKR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). IBKR was in 29 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 25 hedge funds in our database with IBKR holdings at the end of the previous quarter.
If you’d ask most stock holders, hedge funds are seen as worthless, outdated financial vehicles of the past. While there are more than 8000 funds in operation at present, We hone in on the leaders of this group, about 850 funds. These investment experts orchestrate bulk of all hedge funds’ total asset base, and by keeping track of their unrivaled picks, Insider Monkey has uncovered several investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
David Harding of Winton Capital Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. 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. With all of this in mind let’s take a glance at the new hedge fund action surrounding Interactive Brokers Group, Inc. (NASDAQ:IBKR).
What have hedge funds been doing with Interactive Brokers Group, Inc. (NASDAQ:IBKR)?
Heading into the first quarter of 2020, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from the previous quarter. By comparison, 21 hedge funds held shares or bullish call options in IBKR a year ago. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Among these funds, Bares Capital Management held the most valuable stake in Interactive Brokers Group, Inc. (NASDAQ:IBKR), which was worth $348.4 million at the end of the third quarter. On the second spot was Cantillon Capital Management which amassed $116.7 million worth of shares. Select Equity Group, Ancient Art (Teton Capital), and Cat Rock Capital 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 Ancient Art (Teton Capital) allocated the biggest weight to Interactive Brokers Group, Inc. (NASDAQ:IBKR), around 11.23% of its 13F portfolio. Anavon Capital is also relatively very bullish on the stock, dishing out 11.2 percent of its 13F equity portfolio to IBKR.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Anavon Capital, managed by Avi Fruchter, assembled the biggest position in Interactive Brokers Group, Inc. (NASDAQ:IBKR). Anavon Capital had $11.7 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also made a $7.2 million investment in the stock during the quarter. The other funds with brand new IBKR positions are D. E. Shaw’s D E Shaw, Michael Gelband’s ExodusPoint Capital, and Parvinder Thiara’s Athanor Capital.
Let’s now review hedge fund activity in other stocks similar to Interactive Brokers Group, Inc. (NASDAQ:IBKR). We will take a look at Ryanair Holdings plc (NASDAQ:RYAAY), Mettler-Toledo International Inc. (NYSE:MTD), The Clorox Company (NYSE:CLX), and Cheniere Energy Partners LP (NYSE:CQP). This group of stocks’ market values resemble IBKR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RYAAY | 22 | 829569 | 0 |
| MTD | 29 | 560946 | 4 |
| CLX | 27 | 864420 | -10 |
| CQP | 7 | 19372 | 2 |
| Average | 21.25 | 568577 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $569 million. That figure was $886 million in IBKR’s case. Mettler-Toledo International Inc. (NYSE:MTD) is the most popular stock in this table. On the other hand Cheniere Energy Partners LP (NYSE:CQP) is the least popular one with only 7 bullish hedge fund positions. Interactive Brokers Group, Inc. (NASDAQ:IBKR) is not the most popular stock in this group but hedge fund interest is still above average. 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 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but still beat the market by 3.2 percentage points. Hedge funds were also right about betting on IBKR as the stock returned -14.2% during the first quarter (through March 16th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
