“Market volatility has picked up again over the past few weeks. Headlines highlight risks regarding interest rates, the Fed, China, house prices, auto sales, trade wars, and more. Uncertainty abounds. But doesn’t it always? I have no view on whether the recent volatility will continue for a while, or whether the market will be back at all-time highs before we know it. I remain focused on preserving and growing our capital, and continue to believe that the best way to do so is via a value-driven, concentrated, patient approach. I shun consensus holdings, rich valuations, and market fads, in favor of solid, yet frequently off-the-beaten-path, businesses run by excellent, aligned management teams, purchased at deep discounts to intrinsic value,” are the words of Maran Capital’s Dan Roller. His stock picks have been beating the S&P 500 Index handily. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards IDACORP Inc (NYSE:IDA) and see how it was affected.
IDACORP Inc (NYSE:IDA) investors should pay attention to an increase in enthusiasm from smart money recently. Our calculations also showed that ida isn’t among the 30 most popular stocks among hedge funds.
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 market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let’s take a peek at the fresh hedge fund action encompassing IDACORP Inc (NYSE:IDA).
What does the smart money think about IDACORP Inc (NYSE:IDA)?
At Q4’s end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 82% from the second quarter of 2018. On the other hand, there were a total of 11 hedge funds with a bullish position in IDA a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of IDACORP Inc (NYSE:IDA), with a stake worth $107.7 million reported as of the end of September. Trailing Renaissance Technologies was Fisher Asset Management, which amassed a stake valued at $33.4 million. Winton Capital Management, GLG Partners, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
As one would reasonably expect, key hedge funds were leading the bulls’ herd. D E Shaw, managed by D. E. Shaw, established the biggest position in IDACORP Inc (NYSE:IDA). D E Shaw had $6.6 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $3.5 million investment in the stock during the quarter. The following funds were also among the new IDA investors: Matthew Tewksbury’s Stevens Capital Management, Ray Dalio’s Bridgewater Associates, and John Overdeck and David Siegel’s Two Sigma Advisors.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as IDACORP Inc (NYSE:IDA) but similarly valued. We will take a look at Insulet Corporation (NASDAQ:PODD), Morningstar, Inc. (NASDAQ:MORN), Ceridian HCM Holding Inc. (NYSE:CDAY), and Cable One Inc (NYSE:CABO). This group of stocks’ market caps resemble IDA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PODD | 22 | 393036 | 0 |
| MORN | 20 | 191984 | 1 |
| CDAY | 17 | 541979 | -1 |
| CABO | 15 | 562023 | -3 |
| Average | 18.5 | 422256 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $422 million. That figure was $227 million in IDA’s case. Insulet Corporation (NASDAQ:PODD) is the most popular stock in this table. On the other hand Cable One Inc (NYSE:CABO) is the least popular one with only 15 bullish hedge fund positions. IDACORP Inc (NYSE:IDA) 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. Our calculations showed that top 15 most popular stocks among hedge funds returned 21.3% through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Unfortunately IDA wasn’t in this group. Hedge funds that bet on IDA were disappointed as the stock returned 6.2% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 12 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
