Hedge Funds Are Dumping The Interpublic Group of Companies, Inc. (IPG)

Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the third quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 20 stock picks outperformed the S&P 500 Index by 9.9 percentage points through the end of November. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.

The Interpublic Group of Companies, Inc. (NYSE:IPG) investors should pay attention to a decrease in hedge fund sentiment lately. Our calculations also showed that IPG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).

Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Today there are a lot of methods market participants can use to size up stocks. A duo of the most innovative methods are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the elite hedge fund managers can trounce the market by a significant amount (see the details here).

Mario Gabelli of GAMCO Investors

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to check out the fresh hedge fund action surrounding The Interpublic Group of Companies, Inc. (NYSE:IPG).

Hedge fund activity in The Interpublic Group of Companies, Inc. (NYSE:IPG)

At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in IPG a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Pzena Investment Management held the most valuable stake in The Interpublic Group of Companies, Inc. (NYSE:IPG), which was worth $356.5 million at the end of the third quarter. On the second spot was Ariel Investments which amassed $195.7 million worth of shares. AQR Capital Management, GAMCO Investors, and Citadel Investment Group 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 Ariel Investments allocated the biggest weight to The Interpublic Group of Companies, Inc. (NYSE:IPG), around 2.61% of its portfolio. Pzena Investment Management is also relatively very bullish on the stock, designating 1.94 percent of its 13F equity portfolio to IPG.

Since The Interpublic Group of Companies, Inc. (NYSE:IPG) has witnessed bearish sentiment from the smart money, we can see that there was a specific group of hedge funds that decided to sell off their entire stakes in the third quarter. Intriguingly, Phill Gross and Robert Atchinson’s Adage Capital Management dropped the largest investment of all the hedgies watched by Insider Monkey, comprising about $10.5 million in stock, and David Harding’s Winton Capital Management was right behind this move, as the fund dumped about $6.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 8 funds in the third quarter.

Let’s now review hedge fund activity in other stocks similar to The Interpublic Group of Companies, Inc. (NYSE:IPG). These stocks are Dropbox, Inc. (NASDAQ:DBX), AEGON N.V. (NYSE:AEG), Grupo Aval Acciones y Valores S.A. (NYSE:AVAL), and Neurocrine Biosciences, Inc. (NASDAQ:NBIX). This group of stocks’ market values are similar to IPG’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $531 million. That figure was $755 million in IPG’s case. Neurocrine Biosciences, Inc. (NASDAQ:NBIX) is the most popular stock in this table. On the other hand AEGON N.V. (NYSE:AEG) is the least popular one with only 6 bullish hedge fund positions. The Interpublic Group of Companies, Inc. (NYSE:IPG) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately IPG wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on IPG were disappointed as the stock returned 5% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

Disclosure: None. This article was originally published at Insider Monkey.