We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Independence Holding Company (NYSE:IHC).
Independence Holding Company (NYSE:IHC) shareholders have witnessed an increase in enthusiasm from smart money of late. Independence Holding Company (NYSE:IHC) was in 40 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 7. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that IHC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind let’s go over the latest hedge fund action regarding Independence Holding Company (NYSE:IHC).
J. Carlo Cannell of Cannell Capital
Do Hedge Funds Think IHC Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 471% from one quarter earlier. By comparison, 5 hedge funds held shares or bullish call options in IHC a year ago. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Among these funds, Cannell Capital held the most valuable stake in Independence Holding Company (NYSE:IHC), which was worth $30.1 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $22.7 million worth of shares. Adage Capital Management, Schonfeld Strategic Advisors, and Vista Equity Partners 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 Cannell Capital allocated the biggest weight to Independence Holding Company (NYSE:IHC), around 4.97% of its 13F portfolio. Indaba Capital Management is also relatively very bullish on the stock, dishing out 0.52 percent of its 13F equity portfolio to IHC.
As aggregate interest increased, key hedge funds were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, assembled the most valuable position in Independence Holding Company (NYSE:IHC). Citadel Investment Group had $22.7 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $22.1 million position during the quarter. The other funds with brand new IHC positions are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Robert Smith’s Vista Equity Partners, and Jimmy Levin’s Sculptor Capital.
Let’s now review hedge fund activity in other stocks similar to Independence Holding Company (NYSE:IHC). We will take a look at Movado Group, Inc (NYSE:MOV), Plymouth Industrial REIT, Inc. (NYSE:PLYM), TravelCenters of America Inc. (NASDAQ:TA), Central Pacific Financial Corp. (NYSE:CPF), Renalytix plc (NASDAQ:RNLX), PAVmed Inc. (NASDAQ:PAVM), and TCG BDC, Inc. (NASDAQ:CGBD). This group of stocks’ market valuations resemble IHC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MOV | 10 | 48995 | -5 |
| PLYM | 11 | 37197 | 1 |
| TA | 16 | 134869 | 9 |
| CPF | 13 | 34080 | 3 |
| RNLX | 5 | 15303 | -5 |
| PAVM | 8 | 7320 | 1 |
| CGBD | 11 | 36238 | 1 |
| Average | 10.6 | 44857 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.6 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $317 million in IHC’s case. TravelCenters of America Inc. (NASDAQ:TA) is the most popular stock in this table. On the other hand Renalytix plc (NASDAQ:RNLX) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Independence Holding Company (NYSE:IHC) is more popular among hedge funds. Our overall hedge fund sentiment score for IHC is 90. 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 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on IHC as the stock returned 13.9% since the end of September (through 11/30) 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.
Follow Independence Holding Co (NYSE:IHC)
Follow Independence Holding Co (NYSE:IHC)
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Disclosure: None. This article was originally published at Insider Monkey.
