Is ICICI Bank Limited (ADR) (IBN) a Good Buy?

At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

ICICI Bank Limited (ADR) (NYSE:IBN) has seen an increase in hedge fund sentiment lately. 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 Deere & Company (NYSE:DE), TE Connectivity Ltd. (NYSE:TEL), and Eaton Corporation, PLC Ordinary Shares (NYSE:ETN) to gather more data points.

Now, let’s take a glance at the recent action surrounding ICICI Bank Limited (ADR) (NYSE:IBN).

What have hedge funds been doing with ICICI Bank Limited (ADR) (NYSE:IBN)?

At the end of the third quarter, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from one quarter earlier. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Ken Fisher’s Fisher Asset Management has the largest position in ICICI Bank Limited (ADR) (NYSE:IBN), worth close to $86.7 million, accounting for 0.2% of its total 13F portfolio. The second largest stake is held by Canyon Capital Advisors, managed by Joshua Friedman and Mitchell Julis, which holds a $63.2 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions include Howard Marks’ Oaktree Capital Management, and Jim Simons’ Renaissance Technologies.

Now, some big names have jumped into ICICI Bank Limited (ADR) (NYSE:IBN) headfirst. Millennium Management, managed by Israel Englander, created the most valuable position in ICICI Bank Limited (ADR) (NYSE:IBN). Millennium Management had $12 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $8.3 million position during the quarter. The other funds with brand new IBN positions are Porter Collins, Daniel Moses, and Vincent Daniel’s Seawolf Capital, Peter Muller’s PDT Partners, and Chao Ku’s Nine Chapters Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as ICICI Bank Limited (ADR) (NYSE:IBN) but similarly valued. We will take a look at Deere & Company (NYSE:DE), TE Connectivity Ltd. (NYSE:TEL), Eaton Corporation, PLC Ordinary Shares (NYSE:ETN), and Sempra Energy (NYSE:SRE). This group of stocks’ market valuations are closest to IBN’s market valuation.

As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $1464 million. That figure was $439 million in IBN’s case. Eaton Corporation, PLC Ordinary Shares (NYSE:ETN) is the most popular stock in this table. On the other hand TE Connectivity Ltd. (NYSE:TEL) is the least popular one with only 28 bullish hedge fund positions. ICICI Bank Limited (ADR) (NYSE:IBN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ETN might be a better candidate to consider a long position.