Hedge Funds Aren’t Crazy About Iron Mountain Incorporated (IRM) Anymore

We can judge whether Iron Mountain Incorporated (NYSE:IRM) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, research shows that these picks historically outperformed the market when we factor in known risk factors.

Is Iron Mountain Incorporated (NYSE:IRM) ready to rally soon? The best stock pickers are becoming less confident. The number of long hedge fund bets was trimmed by 5 in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Western Gas Partners, LP (NYSE:WES), Israel Chemicals Ltd. (NYSE:ICL), and Msci Inc (NYSE:MSCI) to gather more data points.

If you’d ask most market participants, hedge funds are seen as slow, old financial tools of yesteryear. While there are greater than 8000 funds trading today, Our researchers choose to focus on the elite of this group, around 700 funds. These hedge fund managers administer most of the smart money’s total asset base, and by shadowing their top picks, Insider Monkey has found a number of investment strategies that have historically surpassed Mr. Market. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

Keeping this in mind, we’re going to take a look at the fresh action encompassing Iron Mountain Incorporated (NYSE:IRM).

What have hedge funds been doing with Iron Mountain Incorporated (NYSE:IRM)?

Heading into Q4, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -26% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Jonathon Jacobson’s Highfields Capital Management has the biggest position in Iron Mountain Incorporated (NYSE:IRM), worth close to $191.2 million, corresponding to 1.7% of its total 13F portfolio. Coming in second is Makaira Partners, managed by Thomas Bancroft, which holds a $81.2 million position; 13.2% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions comprise Jeffrey Altman’s Owl Creek Asset Management, and John C. Walker’s Stonerise Capital Management.

Because Iron Mountain Incorporated (NYSE:IRM) has faced falling interest from the smart money, it’s easy to see that there was a specific group of money managers who were dropping their positions entirely last quarter. It’s worth mentioning that Shane Finemore’s Manikay Partners dumped the biggest position of the 700 funds monitored by Insider Monkey, worth about $11.5 million in stock, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners was right behind this move, as the fund dropped about $1 million worth. These moves are interesting, as total hedge fund interest dropped by 5 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Iron Mountain Incorporated (NYSE:IRM). These stocks are Western Gas Partners, LP (NYSE:WES), Israel Chemicals Ltd. (NYSE:ICL), Msci Inc (NYSE:MSCI), and American Capital Agency Corp. (NASDAQ:AGNC). This group of stocks’ market caps are similar to IRM’s market cap.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $432 million. That figure was $374 million in IRM’s case. Msci Inc (NYSE:MSCI) is the most popular stock in this table. On the other hand Israel Chemicals Ltd. (NYSE:ICL) is the least popular one with only 5 bullish hedge fund positions. Iron Mountain Incorporated (NYSE:IRM) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MSCI might be a better candidate to consider a long position.