Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards ICF International Inc (NASDAQ:ICFI).
ICF International Inc (NASDAQ:ICFI) was in 10 hedge funds’ portfolios at the end of June. The all time high for this statistic is 17. ICFI investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. There were 12 hedge funds in our database with ICFI positions at the end of the first quarter. Our calculations also showed that ICFI 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.
Martin Whitman of Third Avenue Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. 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. With all of this in mind let’s go over the key hedge fund action encompassing ICF International Inc (NASDAQ:ICFI).
Do Hedge Funds Think ICFI Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the first quarter of 2020. On the other hand, there were a total of 11 hedge funds with a bullish position in ICFI a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Intrinsic Edge Capital was the largest shareholder of ICF International Inc (NASDAQ:ICFI), with a stake worth $7.4 million reported as of the end of June. Trailing Intrinsic Edge Capital was Third Avenue Management, which amassed a stake valued at $7.4 million. 12th Street Asset Management, Citadel Investment Group, and Two Sigma Advisors 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 12th Street Asset Management allocated the biggest weight to ICF International Inc (NASDAQ:ICFI), around 1.06% of its 13F portfolio. Third Avenue Management is also relatively very bullish on the stock, earmarking 0.97 percent of its 13F equity portfolio to ICFI.
Due to the fact that ICF International Inc (NASDAQ:ICFI) has witnessed falling interest from hedge fund managers, it’s safe to say that there exists a select few fund managers that decided to sell off their positions entirely in the second quarter. Interestingly, Ken Grossman and Glen Schneider’s SG Capital Management said goodbye to the largest position of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $1.8 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund cut about $0.2 million worth. These transactions are important to note, as total hedge fund interest fell by 2 funds in the second quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ICF International Inc (NASDAQ:ICFI) but similarly valued. We will take a look at Compass Diversified (NYSE:CODI), Kronos Worldwide, Inc. (NYSE:KRO), Regenxbio Inc (NASDAQ:RGNX), Silk Road Medical, Inc. (NASDAQ:SILK), ON24, Inc. (NYSE:ONTF), Senseonics Holdings, Inc. (NYSE:SENS), and Construction Partners, Inc. (NASDAQ:ROAD). This group of stocks’ market values match ICFI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CODI | 4 | 44377 | -1 |
| KRO | 11 | 24850 | 2 |
| RGNX | 15 | 195730 | -7 |
| SILK | 13 | 88185 | -8 |
| ONTF | 13 | 98891 | -6 |
| SENS | 16 | 67558 | 4 |
| ROAD | 9 | 29155 | -1 |
| Average | 11.6 | 78392 | -2.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $30 million in ICFI’s case. Senseonics Holdings, Inc. (NYSE:SENS) is the most popular stock in this table. On the other hand Compass Diversified (NYSE:CODI) is the least popular one with only 4 bullish hedge fund positions. ICF International Inc (NASDAQ:ICFI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ICFI is 45.6. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately ICFI wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ICFI investors were disappointed as the stock returned 2.3% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow Icf International Inc. (NASDAQ:ICFI)
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Disclosure: None. This article was originally published at Insider Monkey.
