The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Independence Contract Drilling Inc (NYSE:ICD).
Is ICD stock a buy here? Hedge fund interest in Independence Contract Drilling Inc (NYSE:ICD) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ICD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as CYANOTECH CORP (NASDAQ:CYAN), BOQI International Medical, Inc. (NASDAQ:BIMI), and U.S. Energy Corp. (NASDAQ:USEG) to gather more data points.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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 take a peek at the recent hedge fund action regarding Independence Contract Drilling Inc (NYSE:ICD).
Do Hedge Funds Think ICD Is A Good Stock To Buy Now?
At the end of March, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ICD over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, MSDC Management, managed by Marc Lisker, Glenn Fuhrman and John Phelan, holds the most valuable position in Independence Contract Drilling Inc (NYSE:ICD). MSDC Management has a $1.7 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Glenn Fuhrman and John Phelan of MSD Capital, with a $0.4 million position; 0.5% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that are bullish comprise Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Renaissance Technologies and . In terms of the portfolio weights assigned to each position MSD Capital allocated the biggest weight to Independence Contract Drilling Inc (NYSE:ICD), around 0.48% of its 13F portfolio. MSDC Management is also relatively very bullish on the stock, designating 0.12 percent of its 13F equity portfolio to ICD.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s go over hedge fund activity in other stocks similar to Independence Contract Drilling Inc (NYSE:ICD). We will take a look at CYANOTECH CORP (NASDAQ:CYAN), BOQI International Medical, Inc. (NASDAQ:BIMI), U.S. Energy Corp. (NASDAQ:USEG), SenesTech, Inc. (NASDAQ:SNES), SunLink Health Systems, Inc. (NYSE:SSY), ENSERVCO Corporation (NYSE:ENSV), and B.O.S. Better Online Solutions (NASDAQ:BOSC). This group of stocks’ market caps are closest to ICD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CYAN | 1 | 643 | 0 |
| BIMI | 1 | 283 | 1 |
| USEG | 1 | 79 | 1 |
| SNES | 1 | 28 | 1 |
| SSY | 2 | 936 | 1 |
| ENSV | 2 | 257 | 1 |
| BOSC | 2 | 848 | 1 |
| Average | 1.4 | 439 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 1.4 hedge funds with bullish positions and the average amount invested in these stocks was $0 million. That figure was $2 million in ICD’s case. SunLink Health Systems, Inc. (NYSE:SSY) is the most popular stock in this table. On the other hand CYANOTECH CORP (NASDAQ:CYAN) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Independence Contract Drilling Inc (NYSE:ICD) is more popular among hedge funds. Our overall hedge fund sentiment score for ICD is 63. 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 returned 17.2% in 2021 through June 11th but still managed to beat the market by 3.3 percentage points. Hedge funds were also right about betting on ICD as the stock returned 43.3% since the end of March (through 6/11) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Independence Contract Drilling Inc. (NYSE:ICD)
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Disclosure: None. This article was originally published at Insider Monkey.
