Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards International General Insurance Holdings Ltd. (NASDAQ:IGIC).
International General Insurance Holdings Ltd. (NASDAQ:IGIC) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds’ portfolios at the end of June. Our calculations also showed that IGIC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare IGIC to other stocks including CapStar Financial Holdings, Inc. (NASDAQ:CSTR), Harpoon Therapeutics, Inc. (NASDAQ:HARP), and Kandi Technolgies Group Inc. (NASDAQ:KNDI) to get a better sense of its popularity.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Chuck Royce of Royce & Associates
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s review the fresh hedge fund action surrounding International General Insurance Holdings Ltd. (NASDAQ:IGIC).
Do Hedge Funds Think IGIC Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 9 hedge funds with a bullish position in IGIC a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, ZWEIG DIMENNA PARTNERS was the largest shareholder of International General Insurance Holdings Ltd. (NASDAQ:IGIC), with a stake worth $6.3 million reported as of the end of June. Trailing ZWEIG DIMENNA PARTNERS was Royce & Associates, which amassed a stake valued at $4.7 million. Atika Capital, Harvey Partners, and Weiss Asset Management were 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 Harvey Partners allocated the biggest weight to International General Insurance Holdings Ltd. (NASDAQ:IGIC), around 1.14% of its 13F portfolio. ZWEIG DIMENNA PARTNERS is also relatively very bullish on the stock, designating 0.38 percent of its 13F equity portfolio to IGIC.
Since International General Insurance Holdings Ltd. (NASDAQ:IGIC) has experienced a decline in interest from the smart money, it’s easy to see that there is a sect of funds who sold off their positions entirely by the end of the second quarter. Interestingly, Israel Englander’s Millennium Management sold off the biggest stake of the 750 funds followed by Insider Monkey, valued at an estimated $0.2 million in stock. Jim Simons (founder)’s fund, Renaissance Technologies, also said goodbye to its stock, about $0.1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as International General Insurance Holdings Ltd. (NASDAQ:IGIC) but similarly valued. These stocks are CapStar Financial Holdings, Inc. (NASDAQ:CSTR), Harpoon Therapeutics, Inc. (NASDAQ:HARP), Kandi Technolgies Group Inc. (NASDAQ:KNDI), Unifi, Inc. (NYSE:UFI), Star Group L.P. (NYSE:SGU), Miller Industries, Inc. (NYSE:MLR), and Donegal Group Inc (NASDAQ:DGICA). All of these stocks’ market caps are closest to IGIC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CSTR | 13 | 27705 | 1 |
| HARP | 14 | 93963 | -3 |
| KNDI | 7 | 12431 | -1 |
| UFI | 10 | 101658 | -3 |
| SGU | 11 | 67913 | 5 |
| MLR | 10 | 71602 | 3 |
| DGICA | 11 | 15660 | 2 |
| Average | 10.9 | 55847 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.9 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $20 million in IGIC’s case. Harpoon Therapeutics, Inc. (NASDAQ:HARP) is the most popular stock in this table. On the other hand Kandi Technolgies Group Inc. (NASDAQ:KNDI) is the least popular one with only 7 bullish hedge fund positions. International General Insurance Holdings Ltd. (NASDAQ:IGIC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IGIC is 53.7. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 25.7% in 2021 through September 27th and surpassed the market again by 6.2 percentage points. Unfortunately IGIC wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); IGIC investors were disappointed as the stock returned -5% since the end of June (through 9/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow International General Insurance Holdings Ltd. (NASDAQ:IGIC)
Follow International General Insurance Holdings Ltd. (NASDAQ:IGIC)
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Disclosure: None. This article was originally published at Insider Monkey.
