Is IAC/InterActiveCorp (IAC) a Good Stock to Buy?

Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the successful investors’ consensus returns have been exceptional. The top 30 mid-cap stocks among the best performing hedge funds in our database yielded an average return of 18% during the last 12 months, outperforming the S&P 500 Index funds by double digits. Although the successful funds occasionally have their duds, such as SunEdison and Valeant, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of IAC/InterActiveCorp (NASDAQ:IAC).

Is IAC/InterActiveCorp (NASDAQ:IAC) going to take off soon? It looks like investors who are in the know are selling. The number of bullish hedge fund bets shrunk by four during the third quarter. There were 31 hedge funds in our database with IAC holdings at the end of September. At the end of this article we will also compare IAC to other stocks including AutoNation, Inc. (NYSE:AN), MDU Resources Group Inc (NYSE:MDU), and Genpact Limited (NYSE:G) to get a better sense of its popularity.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

Production Perig/Shutterstock.com

Now, let’s take a look at the key action surrounding IAC/InterActiveCorp (NASDAQ:IAC).

Hedge fund activity in IAC/InterActiveCorp (NASDAQ:IAC)

At the end of September, a total of 31 funds tracked by Insider Monkey held long positions in IAC/InterActiveCorp, down by 11% from the end of the second quarter. On the other hand, there were a total of 42 hedge funds with a bullish position in IAC at the beginning of this year. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Jonathon Jacobson’s Highfields Capital Management has the most valuable position in IAC/InterActiveCorp (NASDAQ:IAC), worth close to $277.1 million, corresponding to 2.6% of its total 13F portfolio. Sitting at the No. 2 spot is Steadfast Capital Management, led by Robert Pitts, holding a $119.8 million position; 2.1% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish consist of Christian Leone’s Luxor Capital Group, Eric Bannasch’s Cadian Capital, and Amy Minella’s Cardinal Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Due to the fact that IAC/InterActiveCorp (NASDAQ:IAC) has faced bearish sentiment from the smart money, we can see that there is a sect of fund managers that elected to cut their full holdings during the third quarter. Intriguingly, Jamie Zimmerman’s Litespeed Management dumped the biggest position of all the hedgies followed by Insider Monkey, totaling about $50.3 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dumped about $11 million worth of shares.

Let’s now review hedge fund activity in other stocks similar to IAC/InterActiveCorp (NASDAQ:IAC). We will take a look at AutoNation, Inc. (NYSE:AN), MDU Resources Group Inc (NYSE:MDU), Genpact Limited (NYSE:G), and Polaris Industries Inc. (NYSE:PII). This group of stocks’ market caps are similar to IAC’s market cap.

As you can see these stocks had an average of 17 funds with bullish positions and the average amount invested in these stocks was $427 million. That figure was $1.29 billion in IAC’s case. AutoNation, Inc. (NYSE:AN) is the most popular stock in this table. On the other hand MDU Resources Group Inc (NYSE:MDU) is the least popular one with only 10 investors holding long positions. Compared to these stocks IAC/InterActiveCorp (NASDAQ:IAC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: none