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 Intellicheck, Inc. (NASDAQ:IDN).
Is Intellicheck, Inc. (NASDAQ:IDN) an excellent stock to buy now? Money managers are in a pessimistic mood. The number of bullish hedge fund bets were cut by 1 in recent months. Our calculations also showed that IDN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 S&P 500 ETFs by 44 percentage points since March 2017 (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.
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. Now we’re going to take a gander at the latest hedge fund action regarding Intellicheck, Inc. (NASDAQ:IDN).
How are hedge funds trading Intellicheck, Inc. (NASDAQ:IDN)?
Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from one quarter earlier. On the other hand, there were a total of 2 hedge funds with a bullish position in IDN a year ago. 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, Renaissance Technologies was the largest shareholder of Intellicheck, Inc. (NASDAQ:IDN), with a stake worth $1.2 million reported as of the end of September. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $0.2 million. PEAK6 Capital Management was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Intellicheck, Inc. (NASDAQ:IDN), around 0.0012% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, setting aside 0.0004 percent of its 13F equity portfolio to IDN.
Seeing as Intellicheck, Inc. (NASDAQ:IDN) has experienced declining sentiment from the aggregate hedge fund industry, logic holds that there was a specific group of hedgies that slashed their full holdings last quarter. At the top of the heap, Michael Gelband’s ExodusPoint Capital sold off the biggest stake of the “upper crust” of funds watched by Insider Monkey, valued at an estimated $0.1 million in stock, and Frank Slattery’s Symmetry Peak Management was right behind this move, as the fund sold off about $0.1 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 1 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Intellicheck, Inc. (NASDAQ:IDN) but similarly valued. We will take a look at Organovo Holdings Inc (NASDAQ:ONVO), Verona Pharma plc (NASDAQ:VRNA), Nabriva Therapeutics plc (NASDAQ:NBRV), and China Automotive Systems, Inc. (NASDAQ:CAAS). This group of stocks’ market valuations match IDN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ONVO | 5 | 3174 | 0 |
| VRNA | 2 | 11303 | -1 |
| NBRV | 8 | 7146 | -1 |
| CAAS | 1 | 796 | 0 |
| Average | 4 | 5605 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $1 million in IDN’s case. Nabriva Therapeutics plc (NASDAQ:NBRV) is the most popular stock in this table. On the other hand China Automotive Systems, Inc. (NASDAQ:CAAS) is the least popular one with only 1 bullish hedge fund positions. Intellicheck, Inc. (NASDAQ:IDN) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. A small number of hedge funds were also right about betting on IDN as the stock returned 107.4% during the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.