We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (read our latest 10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of International Flavors & Fragrances Inc (NYSE:IFF).
International Flavors & Fragrances Inc (NYSE:IFF) was in 28 hedge funds’ portfolios at the end of the fourth quarter of 2019. IFF has experienced an increase in hedge fund interest lately. There were 22 hedge funds in our database with IFF holdings at the end of the previous quarter. Our calculations also showed that IFF isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most stock holders, hedge funds are assumed to be unimportant, outdated investment tools of yesteryear. While there are over 8000 funds trading at present, We hone in on the leaders of this club, about 850 funds. These hedge fund managers command the majority of the smart money’s total asset base, and by tailing their highest performing picks, Insider Monkey has figured out various investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Israel Englander of Millennium Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the fresh hedge fund action encompassing International Flavors & Fragrances Inc (NYSE:IFF).
How have hedgies been trading International Flavors & Fragrances Inc (NYSE:IFF)?
At Q4’s end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the third quarter of 2019. On the other hand, there were a total of 21 hedge funds with a bullish position in IFF a year ago. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
The largest stake in International Flavors & Fragrances Inc (NYSE:IFF) was held by Millennium Management, which reported holding $69.1 million worth of stock at the end of September. It was followed by GAMCO Investors with a $67.1 million position. Other investors bullish on the company included Citadel Investment Group, Echo Street Capital Management, and BlueCrest Capital Mgmt.. In terms of the portfolio weights assigned to each position Sandbar Asset Management allocated the biggest weight to International Flavors & Fragrances Inc (NYSE:IFF), around 2.81% of its 13F portfolio. Beech Hill Partners is also relatively very bullish on the stock, earmarking 1.69 percent of its 13F equity portfolio to IFF.
Consequently, some big names were breaking ground themselves. Millennium Management, managed by Israel Englander, created the most outsized position in International Flavors & Fragrances Inc (NYSE:IFF). Millennium Management had $69.1 million invested in the company at the end of the quarter. Daniel Lascano’s Lomas Capital Management also made a $8.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Ray Dalio’s Bridgewater Associates, Jinghua Yan’s TwinBeech Capital, and Matthew Tewksbury’s Stevens Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as International Flavors & Fragrances Inc (NYSE:IFF) but similarly valued. These stocks are Zebra Technologies Corporation (NASDAQ:ZBRA), Masco Corporation (NYSE:MAS), CenterPoint Energy, Inc. (NYSE:CNP), and UDR, Inc. (NYSE:UDR). This group of stocks’ market valuations are similar to IFF’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ZBRA | 34 | 614256 | 15 |
| MAS | 45 | 948362 | -6 |
| CNP | 30 | 1326987 | -1 |
| UDR | 21 | 360515 | -4 |
| Average | 32.5 | 812530 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.5 hedge funds with bullish positions and the average amount invested in these stocks was $813 million. That figure was $291 million in IFF’s case. Masco Corporation (NYSE:MAS) is the most popular stock in this table. On the other hand UDR, Inc. (NYSE:UDR) is the least popular one with only 21 bullish hedge fund positions. International Flavors & Fragrances Inc (NYSE:IFF) 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but still beat the market by 3.2 percentage points. A small number of hedge funds were also right about betting on IFF as the stock returned -21.3% during the same time period and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
