A market surge in the first quarter, spurred by easing global macroeconomic concerns and Powell’s pivot ended up having a positive impact on the markets and many hedge funds as a result. The stocks of smaller companies which were especially hard hit during the fourth quarter slightly outperformed the market during the first quarter. Unfortunately, Trump is unpredictable and volatility returned in the second quarter and smaller-cap stocks went back to selling off. We finished compiling the latest 13F filings to get an idea about what hedge funds are thinking about the overall market as well as individual stocks. In this article we will study the hedge fund sentiment to see how those concerns affected their ownership of Ion Geophysical Corp (NYSE:IO) during the quarter.
Ion Geophysical Corp (NYSE:IO) was in 10 hedge funds’ portfolios at the end of March. IO investors should pay attention to an increase in activity from the world’s largest hedge funds of late. There were 7 hedge funds in our database with IO positions at the end of the previous quarter. Our calculations also showed that IO isn’t among the 30 most popular stocks among hedge funds.
In the eyes of most shareholders, hedge funds are seen as unimportant, old investment vehicles of yesteryear. While there are more than 8000 funds trading at present, Our experts look at the crème de la crème of this group, about 750 funds. Most estimates calculate that this group of people oversee the majority of the hedge fund industry’s total capital, and by paying attention to their top picks, Insider Monkey has formulated a number of investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points a year since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
Sander Gerber of Hudson Bay Capital
We’re going to take a gander at the recent hedge fund action surrounding Ion Geophysical Corp (NYSE:IO).
How are hedge funds trading Ion Geophysical Corp (NYSE:IO)?
At the end of the first quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 43% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in IO over the last 15 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, Gates Capital Management held the most valuable stake in Ion Geophysical Corp (NYSE:IO), which was worth $14.8 million at the end of the first quarter. On the second spot was Renaissance Technologies which amassed $10.2 million worth of shares. Moreover, Royce & Associates, Two Sigma Advisors, and Hudson Bay Capital Management were also bullish on Ion Geophysical Corp (NYSE:IO), allocating a large percentage of their portfolios to this stock.
Consequently, key money managers were leading the bulls’ herd. Hudson Bay Capital Management, managed by Sander Gerber, created the most outsized call position in Ion Geophysical Corp (NYSE:IO). Hudson Bay Capital Management had $0.3 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $0.3 million position during the quarter. The following funds were also among the new IO investors: Mike Vranos’s Ellington, D. E. Shaw’s D E Shaw, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Ion Geophysical Corp (NYSE:IO) but similarly valued. These stocks are Coastal Financial Corporation (NASDAQ:CCB), Codorus Valley Bancorp, Inc. (NASDAQ:CVLY), Union Bankshares, Inc. (NASDAQ:UNB), and Clearfield, Inc. (NASDAQ:CLFD). This group of stocks’ market values are closest to IO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CCB | 2 | 19164 | 0 |
| CVLY | 6 | 19051 | 1 |
| UNB | 1 | 773 | 0 |
| CLFD | 3 | 9389 | 0 |
| Average | 3 | 12094 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $28 million in IO’s case. Codorus Valley Bancorp, Inc. (NASDAQ:CVLY) is the most popular stock in this table. On the other hand Union Bankshares, Inc. (NASDAQ:UNB) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Ion Geophysical Corp (NYSE:IO) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately IO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on IO were disappointed as the stock returned -47.6% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
