Stocks, especially the once high flying technology stocks, had a lousy start to the new year. QQQ lost 9% of its value in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards IAC/InterActiveCorp (NASDAQ:IAC) at the end of the third quarter and determine whether the smart money was really smart about this stock.
Is IAC/InterActiveCorp (NASDAQ:IAC) undervalued? Hedge funds were taking a pessimistic view. The number of bullish hedge fund positions were cut by 3 recently. IAC/InterActiveCorp (NASDAQ:IAC) was in 47 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 72. Our calculations also showed that IAC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 50 hedge funds in our database with IAC holdings at the end of June.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to go over the fresh hedge fund action regarding IAC/InterActiveCorp (NASDAQ:IAC).
Andy Redleaf of Whitebox Advisors
Do Hedge Funds Think IAC Is A Good Stock To Buy Now?
At third quarter’s end, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the previous quarter. On the other hand, there were a total of 72 hedge funds with a bullish position in IAC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Dennis Hong’s ShawSpring Partners has the biggest position in IAC/InterActiveCorp (NASDAQ:IAC), worth close to $378.7 million, accounting for 39.5% of its total 13F portfolio. Sitting at the No. 2 spot is Mason Hawkins of Southeastern Asset Management, with a $217.5 million position; 4.1% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include Greg Poole’s Echo Street Capital Management, Harry Gail’s Harspring Capital Management and Michael Doheny’s Freshford Capital Management. In terms of the portfolio weights assigned to each position ShawSpring Partners allocated the biggest weight to IAC/InterActiveCorp (NASDAQ:IAC), around 39.51% of its 13F portfolio. Harspring Capital Management is also relatively very bullish on the stock, dishing out 10.3 percent of its 13F equity portfolio to IAC.
Judging by the fact that IAC/InterActiveCorp (NASDAQ:IAC) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of hedgies who sold off their entire stakes by the end of the third quarter. It’s worth mentioning that Brandon Haley’s Holocene Advisors dropped the largest investment of all the hedgies watched by Insider Monkey, worth an estimated $93.6 million in stock, and Jason McDougall’s 11 Capital Partners was right behind this move, as the fund dumped about $14.7 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to IAC/InterActiveCorp (NASDAQ:IAC). We will take a look at Aegon N.V. (NYSE:AEG), Tapestry, Inc. (NYSE:TPR), Watsco Inc (NYSE:WSO), agilon health inc. (NYSE:AGL), Oak Street Health, Inc. (NYSE:OSH), QuantumScape Corporation (NYSE:QS), and CureVac N.V. (NASDAQ:CVAC). All of these stocks’ market caps match IAC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AEG | 5 | 12525 | -1 |
| TPR | 41 | 887231 | 0 |
| WSO | 30 | 414892 | 4 |
| AGL | 18 | 270101 | 18 |
| OSH | 19 | 395210 | -14 |
| QS | 25 | 197413 | -1 |
| CVAC | 10 | 45690 | -2 |
| Average | 21.1 | 317580 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $318 million. That figure was $1427 million in IAC’s case. Tapestry, Inc. (NYSE:TPR) is the most popular stock in this table. On the other hand Aegon N.V. (NYSE:AEG) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks IAC/InterActiveCorp (NASDAQ:IAC) is more popular among hedge funds. Our overall hedge fund sentiment score for IAC is 71.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on IAC as the stock returned 4.8% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
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Disclosure: None. This article was originally published at Insider Monkey.
