Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small-cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze IDACORP Inc (NYSE:IDA) from the perspective of those successful funds.
Is IDACORP Inc (NYSE:IDA) a marvelous investment today? Hedge funds are undeniably in a bearish mood. The number of long hedge fund investments were trimmed by 4 recently. IDA was in 6 hedge funds’ portfolios at the end of the third quarter of 2016. There were 10 hedge funds in our database with IDA positions at the end of the second quarter. 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 Western Alliance Bancorporation (NYSE:WAL), RSP Permian Inc (NYSE:RSPP), and Bright Horizons Family Solutions Inc (NYSE:BFAM) to gather more data points.
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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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How are hedge funds trading IDACORP Inc (NYSE:IDA)?
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 40% drop from the previous quarter. Below, you can check out the change in hedge fund sentiment towards IDA over the last 5 quarters, which has tumbled substantially over the past 2 quarters. So, let’s review 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, Cliff Asness’ AQR Capital Management has the most valuable position in IDACORP Inc (NYSE:IDA), worth close to $49.1 million. The second most bullish fund manager is Ken Fisher of Fisher Asset Management, with a $42.4 million position. Some other peers that hold long positions encompass Renaissance Technologies, one of the largest hedge funds in the world, David E. Shaw’s D E Shaw, and Ken Griffin’s Citadel Investment Group. 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-micro-cap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually dropped their positions entirely. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the biggest stake of all the investors watched by Insider Monkey, comprising close to $3.4 million in stock, and Glenn Russell Dubin’s Highbridge Capital Management was right behind this move, as the fund dropped about $2.2 million worth of shares.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as IDACORP Inc (NYSE:IDA) but similarly valued. These stocks are Western Alliance Bancorporation (NYSE:WAL), RSP Permian Inc (NYSE:RSPP), Bright Horizons Family Solutions Inc (NYSE:BFAM), and Hudson Pacific Properties Inc (NYSE:HPP). 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 |
|---|---|---|---|
| WAL | 26 | 249621 | -8 |
| RSPP | 31 | 285746 | 5 |
| BFAM | 12 | 86899 | -3 |
| HPP | 17 | 189409 | -6 |
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $203 million. That figure was $96 million in IDA’s case. RSP Permian Inc (NYSE:RSPP) is the most popular stock in this table. On the other hand Bright Horizons Family Solutions Inc (NYSE:BFAM) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks IDACORP Inc (NYSE:IDA) is even less popular than BFAM. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock.
Disclosure: None
