How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding ICON Public Limited Company (NASDAQ:ICLR).
Is ICON Public Limited Company (NASDAQ:ICLR) ready to rally soon? Investors who are in the know were buying. The number of bullish hedge fund bets advanced by 10 lately. ICON Public Limited Company (NASDAQ:ICLR) was in 39 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ICLR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
To the average investor there are a large number of indicators stock traders put to use to value stocks. A pair of the most underrated indicators are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the best investment managers can beat the broader indices by a healthy margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.
David Siegel of Two Sigma Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech 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. Keeping this in mind let’s take a peek at the fresh hedge fund action regarding ICON Public Limited Company (NASDAQ:ICLR).
Do Hedge Funds Think ICLR Is A Good Stock To Buy Now?
At second quarter’s end, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 34% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in ICLR a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in ICON Public Limited Company (NASDAQ:ICLR) was held by Renaissance Technologies, which reported holding $411.1 million worth of stock at the end of June. It was followed by Millennium Management with a $185.6 million position. Other investors bullish on the company included Citadel Investment Group, Two Sigma Advisors, and D E Shaw. In terms of the portfolio weights assigned to each position Montanaro Asset Management allocated the biggest weight to ICON Public Limited Company (NASDAQ:ICLR), around 6.19% of its 13F portfolio. Endurant Capital Management is also relatively very bullish on the stock, earmarking 4.51 percent of its 13F equity portfolio to ICLR.
Consequently, some big names have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, assembled the biggest position in ICON Public Limited Company (NASDAQ:ICLR). Point72 Asset Management had $32 million invested in the company at the end of the quarter. Simon Sadler’s Segantii Capital also made a $25 million investment in the stock during the quarter. The following funds were also among the new ICLR investors: Israel Englander’s Millennium Management, Kevin Molloy’s Iron Triangle Partners, and Vishal Saluja and Pham Quang’s Endurant Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ICON Public Limited Company (NASDAQ:ICLR) but similarly valued. These stocks are Magellan Midstream Partners, L.P. (NYSE:MMP), Teva Pharmaceutical Industries Limited (NYSE:TEVA), Regency Centers Corp (NASDAQ:REG), Norwegian Cruise Line Holdings Ltd (NYSE:NCLH), Five Below Inc (NASDAQ:FIVE), LPL Financial Holdings Inc (NASDAQ:LPLA), and Gaming and Leisure Properties Inc (NASDAQ:GLPI). This group of stocks’ market valuations resemble ICLR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MMP | 13 | 89137 | -1 |
| TEVA | 22 | 947100 | -2 |
| REG | 25 | 192591 | 8 |
| NCLH | 43 | 606617 | 9 |
| FIVE | 42 | 783248 | -1 |
| LPLA | 48 | 1500930 | 10 |
| GLPI | 27 | 515879 | -1 |
| Average | 31.4 | 662215 | 3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.4 hedge funds with bullish positions and the average amount invested in these stocks was $662 million. That figure was $1301 million in ICLR’s case. LPL Financial Holdings Inc (NASDAQ:LPLA) is the most popular stock in this table. On the other hand Magellan Midstream Partners, L.P. (NYSE:MMP) is the least popular one with only 13 bullish hedge fund positions. ICON Public Limited Company (NASDAQ:ICLR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ICLR is 77.1. 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. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Hedge funds were also right about betting on ICLR as the stock returned 28.1% since the end of Q2 (through 10/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
