Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Inogen Inc (NASDAQ:INGN)? The smart money sentiment can provide an answer to this question.
Is Inogen Inc (NASDAQ:INGN) ready to rally soon? The best stock pickers are in a bullish mood. The number of bullish hedge fund positions increased by 4 recently. Overall hedge fund sentiment towards Inogen is currently at its all time high. This is usually a very bullish indicator. For example hedge fund positions in Xerox jumped to its all time high by the end of December and the stock returned more than 72% in the following 3 months or so. Another example is Trade Desk Inc. Hedge fund sentiment towards the stock was also at its all time high at the beginning of this year and the stock returned more than 81% in 3.5 months. Similarly Xilinx, Alteryx and EEFT returned more than 40% after hedge fund sentiment hit its all time high at the end of December. We observed similar performances from OKTA, Twilio, CCK, MSCI, MASI and Progressive Corporation (PGR); these stocks returned 37%, 37%, 35%, 29%, 28% and 27% respectively. There were actually more than 500 stocks that hit all time highs in terms of hedge fund sentiment at the end of December. These stocks delivered an average gain of 22.2% in 2019 through April 25th and outperformed the S&P 500 Index by about 5 percentage points.
If you’d ask most market participants, hedge funds are assumed to be worthless, old investment vehicles of years past. While there are greater than 8000 funds with their doors open at present, Our experts hone in on the bigwigs of this group, around 750 funds. Most estimates calculate that this group of people handle bulk of the hedge fund industry’s total capital, and by monitoring their finest picks, Insider Monkey has spotted many investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by nearly 5 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
Let’s take a glance at the fresh hedge fund action regarding Inogen Inc (NASDAQ:INGN).
How have hedgies been trading Inogen Inc (NASDAQ:INGN)?
Heading into the first quarter of 2019, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards INGN over the last 14 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Point72 Asset Management was the largest shareholder of Inogen Inc (NASDAQ:INGN), with a stake worth $156.5 million reported as of the end of September. Trailing Point72 Asset Management was Renaissance Technologies, which amassed a stake valued at $66.4 million. Citadel Investment Group, Millennium Management, and Rock Springs Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Now, some big names were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, created the largest position in Inogen Inc (NASDAQ:INGN). Point72 Asset Management had $156.5 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $12.8 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Brian Ashford-Russell and Tim Woolley’s Polar Capital, and Phill Gross and Robert Atchinson’s Adage Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Inogen Inc (NASDAQ:INGN) but similarly valued. We will take a look at Cedar Fair, L.P. (NYSE:FUN), Federated Investors Inc (NYSE:FII), Delek US Holdings, Inc. (NYSE:DK), and GATX Corporation (NYSE:GATX). This group of stocks’ market caps resemble INGN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FUN | 10 | 39793 | 3 |
| FII | 15 | 146247 | 0 |
| DK | 27 | 233596 | -4 |
| GATX | 14 | 221069 | 3 |
| Average | 16.5 | 160176 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $160 million. That figure was $379 million in INGN’s case. Delek US Holdings, Inc. (NYSE:DK) is the most popular stock in this table. On the other hand Cedar Fair, L.P. (NYSE:FUN) is the least popular one with only 10 bullish hedge fund positions. Inogen Inc (NASDAQ:INGN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately INGN wasn’t nearly as popular as these 15 stock and hedge funds that were betting on INGN were disappointed as the stock returned -36.5% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
