As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Invesco Ltd. (NYSE:IVZ).
Is Invesco Ltd. (NYSE:IVZ) a worthy investment today? Investors who are in the know were taking a bearish view. The number of bullish hedge fund positions dropped by 2 in recent months. Invesco Ltd. (NYSE:IVZ) was in 32 hedge funds’ portfolios at the end of March. The all time high for this statistic is 38. Our calculations also showed that IVZ isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Nelson Peltz of Trian Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s go over the new hedge fund action surrounding Invesco Ltd. (NYSE:IVZ).
Do Hedge Funds Think IVZ Is A Good Stock To Buy Now?
At the end of March, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the fourth quarter of 2020. On the other hand, there were a total of 26 hedge funds with a bullish position in IVZ a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Trian Partners, managed by Nelson Peltz, holds the most valuable position in Invesco Ltd. (NYSE:IVZ). Trian Partners has a $955.3 million position in the stock, comprising 11.3% of its 13F portfolio. The second most bullish fund manager is Millennium Management, managed by Israel Englander, which holds a $105.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism encompass Richard S. Pzena’s Pzena Investment Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Trian Partners allocated the biggest weight to Invesco Ltd. (NYSE:IVZ), around 11.3% of its 13F portfolio. Full18 Capital is also relatively very bullish on the stock, setting aside 1.5 percent of its 13F equity portfolio to IVZ.
Due to the fact that Invesco Ltd. (NYSE:IVZ) has witnessed falling interest from the smart money, logic holds that there exists a select few hedge funds who were dropping their full holdings by the end of the first quarter. Intriguingly, Charles Lemonides’s Valueworks LLC said goodbye to the largest position of the 750 funds monitored by Insider Monkey, worth close to $4.5 million in stock. Donald Sussman’s fund, Paloma Partners, also dropped its stock, about $4 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 2 funds by the end of the first quarter.
Let’s now review hedge fund activity in other stocks similar to Invesco Ltd. (NYSE:IVZ). We will take a look at Erie Indemnity Company (NASDAQ:ERIE), Jack Henry & Associates, Inc. (NASDAQ:JKHY), Nordson Corporation (NASDAQ:NDSN), Tapestry, Inc. (NYSE:TPR), Weibo Corp (NASDAQ:WB), GFL Environmental Inc. (NYSE:GFL), and The Interpublic Group of Companies Inc (NYSE:IPG). This group of stocks’ market valuations match IVZ’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ERIE | 12 | 61677 | 5 |
| JKHY | 20 | 197513 | -8 |
| NDSN | 26 | 179502 | 5 |
| TPR | 50 | 1166145 | 1 |
| WB | 12 | 118275 | -1 |
| GFL | 22 | 561202 | 4 |
| IPG | 29 | 709187 | -9 |
| Average | 24.4 | 427643 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $428 million. That figure was $1240 million in IVZ’s case. Tapestry, Inc. (NYSE:TPR) is the most popular stock in this table. On the other hand Erie Indemnity Company (NASDAQ:ERIE) is the least popular one with only 12 bullish hedge fund positions. Invesco Ltd. (NYSE:IVZ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IVZ is 54.6. 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 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately IVZ wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on IVZ were disappointed as the stock returned 5.4% since the end of March (through 7/2) 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 Invesco Ltd. (NYSE:IVZ)
Follow Invesco Ltd. (NYSE:IVZ)
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Disclosure: None. This article was originally published at Insider Monkey.
