Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Installed Building Products Inc (NYSE:IBP) based on that data.
Installed Building Products Inc (NYSE:IBP) has experienced an increase in enthusiasm from smart money of late. IBP was in 20 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with IBP holdings at the end of the previous quarter. Our calculations also showed that IBP 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Richard Driehaus of Driehaus Capital
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to view the fresh hedge fund action encompassing Installed Building Products Inc (NYSE:IBP).
What does smart money think about Installed Building Products Inc (NYSE:IBP)?
At Q3’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 54% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards IBP over the last 17 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
The largest stake in Installed Building Products Inc (NYSE:IBP) was held by Spruce House Investment Management, which reported holding $113.6 million worth of stock at the end of September. It was followed by GMT Capital with a $27 million position. Other investors bullish on the company included Driehaus Capital, Arrowstreet Capital, and AQR Capital Management. In terms of the portfolio weights assigned to each position Spruce House Investment Management allocated the biggest weight to Installed Building Products Inc (NYSE:IBP), around 4.11% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, dishing out 1 percent of its 13F equity portfolio to IBP.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. AQR Capital Management, managed by Cliff Asness, established the largest position in Installed Building Products Inc (NYSE:IBP). AQR Capital Management had $7.6 million invested in the company at the end of the quarter. Renaissance Technologies also made a $2.3 million investment in the stock during the quarter. The other funds with brand new IBP positions are Brandon Haley’s Holocene Advisors, Benjamin A. Smith’s Laurion Capital Management, and Ken Griffin’s Citadel Investment Group.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Installed Building Products Inc (NYSE:IBP) but similarly valued. These stocks are Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), CSG Systems International, Inc. (NASDAQ:CSGS), Group 1 Automotive, Inc. (NYSE:GPI), and Skyline Champion Corporation (NYSE:SKY). This group of stocks’ market caps match IBP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DCPH | 26 | 542998 | 11 |
| CSGS | 19 | 221276 | 1 |
| GPI | 20 | 171213 | 7 |
| SKY | 25 | 283836 | 0 |
| Average | 22.5 | 304831 | 4.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $305 million. That figure was $189 million in IBP’s case. Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH) is the most popular stock in this table. On the other hand CSG Systems International, Inc. (NASDAQ:CSGS) is the least popular one with only 19 bullish hedge fund positions. Installed Building Products Inc (NYSE:IBP) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on IBP as the stock returned 25% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
