Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Intra-Cellular Therapies Inc (NASDAQ:ITCI).
Intra-Cellular Therapies Inc (NASDAQ:ITCI) was in 23 hedge funds’ portfolios at the end of June. The all time high for this statistic is 27. ITCI investors should be aware of an increase in activity from the world’s largest hedge funds recently. There were 15 hedge funds in our database with ITCI holdings at the end of March. Our calculations also showed that ITCI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Robert Pohly of Samlyn Capital
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. Keeping this in mind let’s take a gander at the key hedge fund action regarding Intra-Cellular Therapies Inc (NASDAQ:ITCI).
Do Hedge Funds Think ITCI Is A Good Stock To Buy Now?
At Q2’s end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 53% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ITCI over the last 24 quarters. 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 Intra-Cellular Therapies Inc (NASDAQ:ITCI) was held by Marshall Wace LLP, which reported holding $113.1 million worth of stock at the end of June. It was followed by Citadel Investment Group with a $63.7 million position. Other investors bullish on the company included Samlyn Capital, Suvretta Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position SilverArc Capital allocated the biggest weight to Intra-Cellular Therapies Inc (NASDAQ:ITCI), around 2.06% of its 13F portfolio. Rhenman & Partners Asset Management is also relatively very bullish on the stock, dishing out 1.19 percent of its 13F equity portfolio to ITCI.
As industrywide interest jumped, key money managers have jumped into Intra-Cellular Therapies Inc (NASDAQ:ITCI) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the biggest position in Intra-Cellular Therapies Inc (NASDAQ:ITCI). Marshall Wace LLP had $113.1 million invested in the company at the end of the quarter. Brian Ashford-Russell and Tim Woolley’s Polar Capital also initiated a $2.4 million position during the quarter. The following funds were also among the new ITCI investors: Greg Eisner’s Engineers Gate Manager, Jinghua Yan’s TwinBeech Capital, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).
Let’s also examine hedge fund activity in other stocks similar to Intra-Cellular Therapies Inc (NASDAQ:ITCI). These stocks are Asbury Automotive Group, Inc. (NYSE:ABG), Sogou Inc. (NYSE:SOGO), Liberty Latin America Ltd. (NASDAQ:LILAK), Spirit Airlines Incorporated (NYSE:SAVE), VNET Group Inc (NASDAQ:VNET), Clearway Energy, Inc. (NYSE:CWEN), and Welbilt, Inc. (NYSE:WBT). This group of stocks’ market caps are similar to ITCI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ABG | 26 | 821483 | 6 |
| SOGO | 19 | 147506 | 3 |
| LILAK | 27 | 556849 | -2 |
| SAVE | 29 | 247716 | 5 |
| VNET | 23 | 264551 | -7 |
| CWEN | 21 | 187962 | -3 |
| WBT | 44 | 984182 | 16 |
| Average | 27 | 458607 | 2.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $459 million. That figure was $379 million in ITCI’s case. Welbilt, Inc. (NYSE:WBT) is the most popular stock in this table. On the other hand Sogou Inc. (NYSE:SOGO) is the least popular one with only 19 bullish hedge fund positions. Intra-Cellular Therapies Inc (NASDAQ:ITCI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ITCI is 43.6. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on ITCI as the stock returned 5.7% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.
Follow Intra-Cellular Therapies Inc. (NASDAQ:ITCI)
Follow Intra-Cellular Therapies Inc. (NASDAQ:ITCI)
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Disclosure: None. This article was originally published at Insider Monkey.
