You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.
Is InterXion Holding NV (NYSE:INXN) undervalued? The best stock pickers are getting less optimistic. The number of bullish hedge fund bets went down by 4 in recent months. Our calculations also showed that INXN isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s go over the key hedge fund action encompassing InterXion Holding NV (NYSE:INXN).
What does the smart money think about InterXion Holding NV (NYSE:INXN)?
Heading into the fourth quarter of 2018, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the second quarter of 2018. By comparison, 32 hedge funds held shares or bullish call options in INXN heading into this year. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
More specifically, Eminence Capital was the largest shareholder of InterXion Holding NV (NYSE:INXN), with a stake worth $187.3 million reported as of the end of September. Trailing Eminence Capital was Echo Street Capital Management, which amassed a stake valued at $169.2 million. Rivulet Capital, D E Shaw, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Since InterXion Holding NV (NYSE:INXN) has witnessed bearish sentiment from hedge fund managers, we can see that there lies a certain “tier” of money managers that elected to cut their entire stakes last quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling about $40.2 million in stock. Eduardo Costa’s fund, Calixto Global Investors, also sold off its stock, about $16.1 million worth. These transactions are interesting, as total hedge fund interest dropped by 4 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to InterXion Holding NV (NYSE:INXN). We will take a look at MGIC Investment Corporation (NYSE:MTG), National Fuel Gas Company (NYSE:NFG), Whiting Petroleum Corporation (NYSE:WLL), and AGCO Corporation (NYSE:AGCO). This group of stocks’ market values resemble INXN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTG | 30 | 430113 | 5 |
| NFG | 16 | 227303 | -1 |
| WLL | 39 | 906986 | 7 |
| AGCO | 21 | 231552 | 4 |
| Average | 26.5 | 448989 | 3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $449 million. That figure was $804 million in INXN’s case. Whiting Petroleum Corporation (NYSE:WLL) is the most popular stock in this table. On the other hand National Fuel Gas Company (NYSE:NFG) is the least popular one with only 16 bullish hedge fund positions. InterXion Holding NV (NYSE:INXN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard WLL might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
