Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Inogen Inc (NASDAQ:INGN) to find out whether there were any major changes in hedge funds’ views.
Is INGN a good stock to buy now? Hedge fund interest in Inogen Inc (NASDAQ:INGN) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that INGN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). 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 OFG Bancorp (NYSE:OFG), B. Riley Financial, Inc. (NASDAQ:RILY), and Pampa Energia S.A. (NYSE:PAM) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Minhua Zhang of Weld Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now let’s take a peek at the new hedge fund action encompassing Inogen Inc (NASDAQ:INGN).
Do Hedge Funds Think INGN Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards INGN over the last 21 quarters. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Inogen Inc (NASDAQ:INGN), with a stake worth $10.3 million reported as of the end of September. Trailing Renaissance Technologies was Two Sigma Advisors, which amassed a stake valued at $7.1 million. Arrowstreet Capital, Marshall Wace LLP, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Factorial Partners allocated the biggest weight to Inogen Inc (NASDAQ:INGN), around 0.66% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, earmarking 0.14 percent of its 13F equity portfolio to INGN.
Judging by the fact that Inogen Inc (NASDAQ:INGN) has experienced falling interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of funds that elected to cut their full holdings last quarter. At the top of the heap, Michael Castor’s Sio Capital cut the largest stake of the 750 funds tracked by Insider Monkey, worth close to $1.9 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund said goodbye to about $0.5 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to Inogen Inc (NASDAQ:INGN). These stocks are OFG Bancorp (NYSE:OFG), B. Riley Financial, Inc. (NASDAQ:RILY), Pampa Energia S.A. (NYSE:PAM), Century Aluminum Co (NASDAQ:CENX), Denny’s Corporation (NASDAQ:DENN), Ebix Inc (NASDAQ:EBIX), and Lumber Liquidators Holdings Inc (NYSE:LL). This group of stocks’ market valuations are similar to INGN’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OFG | 12 | 15248 | 1 |
| RILY | 19 | 88617 | 3 |
| PAM | 8 | 30973 | -2 |
| CENX | 11 | 35940 | -1 |
| DENN | 20 | 65004 | -3 |
| EBIX | 13 | 50750 | -4 |
| LL | 14 | 61499 | 5 |
| Average | 13.9 | 49719 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.9 hedge funds with bullish positions and the average amount invested in these stocks was $50 million. That figure was $37 million in INGN’s case. Denny’s Corporation (NASDAQ:DENN) is the most popular stock in this table. On the other hand Pampa Energia S.A. (NYSE:PAM) is the least popular one with only 8 bullish hedge fund positions. Inogen Inc (NASDAQ:INGN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for INGN is 73.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on INGN as the stock returned 42.6% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
