While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Iconix Brand Group Inc (NASDAQ:ICON).
Is Iconix Brand Group Inc (NASDAQ:ICON) a buy, sell, or hold? The best stock pickers were taking a bearish view. The number of bullish hedge fund bets dropped by 1 lately. Iconix Brand Group Inc (NASDAQ:ICON) was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 15. Our calculations also showed that ICON isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
According to most stock holders, hedge funds are seen as unimportant, old financial vehicles of the past. While there are over 8000 funds trading at present, We hone in on the masters of this group, about 850 funds. Most estimates calculate that this group of people have their hands on most of the hedge fund industry’s total capital, and by observing their first-class equity investments, Insider Monkey has determined various investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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 we’re going to take a peek at the new hedge fund action encompassing Iconix Brand Group Inc (NASDAQ:ICON).
Do Hedge Funds Think ICON Is A Good Stock To Buy Now?
At Q1’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the previous quarter. By comparison, 2 hedge funds held shares or bullish call options in ICON a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jason Mudrick’s Mudrick Capital Management has the biggest position in Iconix Brand Group Inc (NASDAQ:ICON), worth close to $1.9 million, accounting for 0.2% of its total 13F portfolio. On Mudrick Capital Management’s heels is Renaissance Technologies, which holds a $1.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions comprise Jeremy Carton and Gilbert Li’s Alta Fundamental Advisers, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Mudrick Capital Management allocated the biggest weight to Iconix Brand Group Inc (NASDAQ:ICON), around 0.22% of its 13F portfolio. Alta Fundamental Advisers is also relatively very bullish on the stock, setting aside 0.19 percent of its 13F equity portfolio to ICON.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).
Let’s check out hedge fund activity in other stocks similar to Iconix Brand Group Inc (NASDAQ:ICON). We will take a look at Abraxas Petroleum Corp. (NASDAQ:AXAS), Muscle Maker, Inc. (NASDAQ:GRIL), Camber Energy, Inc. (NYSE:CEI), Equus Total Return, Inc. (NYSE:EQS), Artelo Biosciences, Inc. (NASDAQ:ARTL), Rave Restaurant Group, Inc. (NASDAQ:RAVE), and Rubicon Technology, Inc. (NASDAQ:RBCN). This group of stocks’ market values are closest to ICON’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AXAS | 3 | 447 | -1 |
| GRIL | 2 | 374 | 1 |
| CEI | 1 | 176 | -1 |
| EQS | 2 | 200 | 1 |
| ARTL | 1 | 295 | 1 |
| RAVE | 3 | 882 | 1 |
| RBCN | 3 | 4340 | 0 |
| Average | 2.1 | 959 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.1 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $4 million in ICON’s case. Abraxas Petroleum Corp. (NASDAQ:AXAS) is the most popular stock in this table. On the other hand Camber Energy, Inc. (NYSE:CEI) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Iconix Brand Group Inc (NASDAQ:ICON) is more popular among hedge funds. Our overall hedge fund sentiment score for ICON is 62. 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 returned 17.2% in 2021 through June 11th but still managed to beat the market by 3.3 percentage points. Hedge funds were also right about betting on ICON as the stock returned 55.7% since the end of March (through 6/11) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
