There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze INC Research Holdings Inc (NASDAQ:INCR).
INC Research Holdings Inc (NASDAQ:INCR) has seen an increase in support from the world’s most elite money managers lately. At the end of this article we will also compare INCR to other stocks including Northstar Realty Finance Corp. (NYSE:NRF), Boyd Gaming Corporation (NYSE:BYD), and Artisan Partners Asset Management Inc (NYSE:APAM) to get a better sense of its popularity.
Follow Syneos Health Inc. (NASDAQ:SYNH)
Follow Syneos Health Inc. (NASDAQ:SYNH)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Copyright: dolgachov / 123RF Stock Photo
Keeping this in mind, we’re going to take a peek at the key action surrounding INC Research Holdings Inc (NASDAQ:INCR).
How have hedgies been trading INC Research Holdings Inc (NASDAQ:INCR)?
At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a jump of 20% from the second quarter of 2016. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Paul Marshall and Ian Wace’s Marshall Wace LLP has the largest position in INC Research Holdings Inc (NASDAQ:INCR), worth close to $49.8 million and amounting to 0.4% of its total 13F portfolio. The second most bullish fund manager is Arthur B Cohen and Joseph Healey of Healthcor Management LP, with a $44.6 million position; the fund has 2.7% of its 13F portfolio invested in the stock. Other professional money managers that are bullish include Alex Duran and Scott Hendrickson’s Permian Investment Partners, Phill Gross and Robert Atchinson’s Adage Capital Management and Ken Griffin’s Citadel Investment Group.
As aggregate interest increased, some big names were breaking ground themselves. Samlyn Capital, managed by Robert Pohly, assembled the most outsized position in INC Research Holdings Inc (NASDAQ:INCR). The fund reportedly had $20.8 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $16.6 million position during the quarter. The other funds with brand new INCR positions are Neil Chriss’s Hutchin Hill Capital, Brad Farber’s Atika Capital, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as INC Research Holdings Inc (NASDAQ:INCR) but similarly valued. These stocks are Northstar Realty Finance Corp. (NYSE:NRF), Boyd Gaming Corporation (NYSE:BYD), Artisan Partners Asset Management Inc (NYSE:APAM), and Verint Systems Inc. (NASDAQ:VRNT). This group of stocks’ market valuations are closest to INCR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NRF | 32 | 315398 | 0 |
| BYD | 23 | 667524 | -4 |
| APAM | 10 | 94947 | -1 |
| VRNT | 21 | 294430 | 0 |
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $343 million. That figure was $368 million in INCR’s case. Northstar Realty Finance Corp. (NYSE:NRF) is the most popular stock in this table. On the other hand Artisan Partners Asset Management Inc (NYSE:APAM) is the least popular one with only 10 bullish hedge fund positions. INC Research Holdings Inc (NASDAQ:INCR) 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 NRF might be a better candidate to consider a long position.
Disclosure: none.
