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. During the fourth quarter of 2018 we observed increased volatility and small-cap stocks underperformed the market. Things completely reversed during the first half of 2019. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Ingredion Incorporated (NYSE:INGR) to find out whether it was one of their high conviction long-term ideas.
Is Ingredion Incorporated (NYSE:INGR) the right investment to pursue these days? Hedge funds are taking a bullish view. The number of bullish hedge fund positions improved by 3 in recent months. Our calculations also showed that INGR isn’t among the 30 most popular stocks among hedge funds.
In today’s marketplace there are tons of signals shareholders employ to size up stocks. A pair of the most underrated signals are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the top investment managers can beat the market by a very impressive margin (see the details here).
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to analyze the new hedge fund action encompassing Ingredion Incorporated (NYSE:INGR).
How have hedgies been trading Ingredion Incorporated (NYSE:INGR)?
Heading into the third quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards INGR over the last 16 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, AQR Capital Management was the largest shareholder of Ingredion Incorporated (NYSE:INGR), with a stake worth $74.4 million reported as of the end of March. Trailing AQR Capital Management was D E Shaw, which amassed a stake valued at $35.4 million. Millennium Management, Winton Capital Management, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, some big names were leading the bulls’ herd. Winton Capital Management, managed by David Harding, established the largest position in Ingredion Incorporated (NYSE:INGR). Winton Capital Management had $21.7 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $9.1 million investment in the stock during the quarter. The following funds were also among the new INGR investors: Matthew Hulsizer’s PEAK6 Capital Management, Bruce Kovner’s Caxton Associates LP, and Minhua Zhang’s Weld Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Ingredion Incorporated (NYSE:INGR). We will take a look at Smartsheet Inc. (NYSE:SMAR), The Scotts Miracle-Gro Company (NYSE:SMG), Ultrapar Participacoes SA (NYSE:UGP), and argenx SE (NASDAQ:ARGX). This group of stocks’ market values match INGR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SMAR | 46 | 1485379 | 16 |
| SMG | 24 | 322590 | 8 |
| UGP | 7 | 54213 | -5 |
| ARGX | 22 | 791934 | -2 |
| Average | 24.75 | 663529 | 4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $664 million. That figure was $256 million in INGR’s case. Smartsheet Inc. (NYSE:SMAR) is the most popular stock in this table. On the other hand Ultrapar Participacoes SA (NYSE:UGP) is the least popular one with only 7 bullish hedge fund positions. Ingredion Incorporated (NYSE:INGR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately INGR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); INGR investors were disappointed as the stock returned -0.1% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks (view the video below) among hedge funds as many of these stocks already outperformed the market so far in 2019.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
