Does IAC/InterActiveCorp (NASDAQ:IAC) represent a good buying opportunity at the moment? Let’s quickly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.
IAC/InterActiveCorp (NASDAQ:IAC) investors should pay attention to an increase in enthusiasm from smart money of late. Our calculations also showed that IAC isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a glance at the latest hedge fund action surrounding IAC/InterActiveCorp (NASDAQ:IAC).
Hedge fund activity in IAC/InterActiveCorp (NASDAQ:IAC)
Heading into the second quarter of 2019, a total of 51 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from the fourth quarter of 2018. On the other hand, there were a total of 51 hedge funds with a bullish position in IAC a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, Cadian Capital was the largest shareholder of IAC/InterActiveCorp (NASDAQ:IAC), with a stake worth $349.5 million reported as of the end of March. Trailing Cadian Capital was Marcato Capital Management, which amassed a stake valued at $197.3 million. AQR Capital Management, Renaissance Technologies, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, key money managers were leading the bulls’ herd. SQN Investors, managed by Amish Mehta, initiated the largest position in IAC/InterActiveCorp (NASDAQ:IAC). SQN Investors had $47.1 million invested in the company at the end of the quarter. Tim David’s Guardian Point Capital also initiated a $10.5 million position during the quarter. The following funds were also among the new IAC investors: Lee Ainslie’s Maverick Capital, Matthew Tewksbury’s Stevens Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as IAC/InterActiveCorp (NASDAQ:IAC) but similarly valued. These stocks are Cheniere Energy, Inc. (NYSE:LNG), Shinhan Financial Group Co., Ltd. (NYSE:SHG), Grifols SA (NASDAQ:GRFS), and Smith & Nephew plc (NYSE:SNN). This group of stocks’ market caps are similar to IAC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LNG | 53 | 5187506 | 7 |
| SHG | 4 | 11258 | -3 |
| GRFS | 14 | 267276 | 0 |
| SNN | 13 | 274777 | 2 |
| Average | 21 | 1435204 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $1435 million. That figure was $2018 million in IAC’s case. Cheniere Energy, Inc. (NYSE:LNG) is the most popular stock in this table. On the other hand Shinhan Financial Group Co., Ltd. (NYSE:SHG) is the least popular one with only 4 bullish hedge fund positions. IAC/InterActiveCorp (NASDAQ:IAC) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on IAC as the stock returned 5.8% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
