Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 37.6% in 2019 (through the end of November) and outperformed the broader market benchmark by 9.9 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) investors should be aware of an increase in activity from the world’s largest hedge funds of late. IBA was in 4 hedge funds’ portfolios at the end of the third quarter of 2019. There were 3 hedge funds in our database with IBA positions at the end of the previous quarter. Our calculations also showed that IBA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most market participants, hedge funds are viewed as worthless, old investment tools of the past. While there are greater than 8000 funds trading today, We hone in on the aristocrats of this group, about 750 funds. These hedge fund managers command most of the hedge fund industry’s total capital, and by tracking their unrivaled investments, Insider Monkey has unearthed a few investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind let’s take a glance at the latest hedge fund action encompassing Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA).
What does smart money think about Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA)?
Heading into the fourth quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in IBA over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Renaissance Technologies has the biggest position in Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA), worth close to $33.8 million, corresponding to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Chuck Royce of Royce & Associates, with a $4.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish encompass Eric Sprott’s Sprott Asset Management, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA), around 0.96% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.05 percent of its 13F equity portfolio to IBA.
Now, key money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, established the biggest position in Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA). Millennium Management had $0.5 million invested in the company at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) but similarly valued. We will take a look at Holly Energy Partners, L.P. (NYSE:HEP), Baozun Inc (NASDAQ:BZUN), Sotheby’s (NYSE:BID), and Nevro Corp (NYSE:NVRO). This group of stocks’ market caps are closest to IBA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HEP | 6 | 14765 | 5 |
| BZUN | 16 | 58309 | 3 |
| BID | 18 | 702089 | -2 |
| NVRO | 21 | 632361 | -7 |
| Average | 15.25 | 351881 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $352 million. That figure was $43 million in IBA’s case. Nevro Corp (NYSE:NVRO) is the most popular stock in this table. On the other hand Holly Energy Partners, L.P. (NYSE:HEP) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) is even less popular than HEP. Hedge funds dodged a bullet by taking a bearish stance towards IBA. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately IBA wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); IBA investors were disappointed as the stock returned -3.9% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
