Before we spend days researching a stock idea we like to take a look at how hedge funds and billionaire investors recently traded that stock. Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of the third quarter of 2018. This means hedge funds that are allocating a higher percentage of their portfolio to small-cap stocks were probably underperforming the market. However, this also means that as small-cap stocks start to mean revert, these hedge funds will start delivering better returns than the S&P 500 Index funds. In this article, we will take a look at what hedge funds think about Innophos Holdings, Inc. (NASDAQ:IPHS).
Innophos Holdings, Inc. (NASDAQ:IPHS) investors should pay attention to an increase in enthusiasm from smart money in recent months. Our calculations also showed that IPHS isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are a large number of metrics shareholders put to use to evaluate stocks. Some of the most under-the-radar metrics are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can outclass the S&P 500 by a very impressive amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the key hedge fund action surrounding Innophos Holdings, Inc. (NASDAQ:IPHS).
How have hedgies been trading Innophos Holdings, Inc. (NASDAQ:IPHS)?
Heading into the third quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in IPHS over the last 16 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Innophos Holdings, Inc. (NASDAQ:IPHS), with a stake worth $25.3 million reported as of the end of March. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $4.6 million. D E Shaw, Citadel Investment Group, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, specific money managers were leading the bulls’ herd. Fondren Management, managed by Bradley Louis Radoff, initiated the biggest position in Innophos Holdings, Inc. (NASDAQ:IPHS). Fondren Management had $0.6 million invested in the company at the end of the quarter. Roger Ibbotson’s Zebra Capital Management also initiated a $0.2 million position during the quarter. The only other fund with a new position in the stock is Benjamin A. Smith’s Laurion Capital Management.
Let’s go over hedge fund activity in other stocks similar to Innophos Holdings, Inc. (NASDAQ:IPHS). We will take a look at Digimarc Corp (NASDAQ:DMRC), Maxar Technologies Inc. (NYSE:MAXR), New Media Investment Group Inc (NYSE:NEWM), and LeMaitre Vascular Inc (NASDAQ:LMAT). All of these stocks’ market caps match IPHS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DMRC | 6 | 50230 | 3 |
| MAXR | 12 | 43172 | 5 |
| NEWM | 14 | 52864 | -3 |
| LMAT | 11 | 20419 | 0 |
| Average | 10.75 | 41671 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $39 million in IPHS’s case. New Media Investment Group Inc (NYSE:NEWM) is the most popular stock in this table. On the other hand Digimarc Corp (NASDAQ:DMRC) is the least popular one with only 6 bullish hedge fund positions. Innophos Holdings, Inc. (NASDAQ:IPHS) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on IPHS as the stock returned 13.5% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
