Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Innodata Inc (NASDAQ:INOD) based on that data.
Is Innodata Inc (NASDAQ:INOD) the right pick for your portfolio? Hedge funds are buying. The number of long hedge fund positions advanced by 1 in recent months. Our calculations also showed that INOD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). INOD was in 3 hedge funds’ portfolios at the end of the first quarter of 2020. There were 2 hedge funds in our database with INOD positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 S&P 500 ETFs by 44 percentage points since March 2017 (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.
Israel Englander of Millennium Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the latest hedge fund action regarding Innodata Inc (NASDAQ:INOD).
How have hedgies been trading Innodata Inc (NASDAQ:INOD)?
Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from one quarter earlier. On the other hand, there were a total of 3 hedge funds with a bullish position in INOD a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Innodata Inc (NASDAQ:INOD), which was worth $0.8 million at the end of the third quarter. On the second spot was Elkhorn Partners which amassed $0 million worth of shares. Millennium Management was 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 Elkhorn Partners allocated the biggest weight to Innodata Inc (NASDAQ:INOD), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.0007 percent of its 13F equity portfolio to INOD.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the largest position in Innodata Inc (NASDAQ:INOD). Millennium Management had $0 million invested in the company at the end of the quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Innodata Inc (NASDAQ:INOD) but similarly valued. We will take a look at Zomedica Pharmaceuticals Corp. (NYSE:ZOM), Chicago Rivet & Machine Co. (NYSE:CVR), Abraxas Petroleum Corp. (NASDAQ:AXAS), and ENGlobal Corp (NASDAQ:ENG). This group of stocks’ market caps match INOD’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ZOM | 1 | 3 | 0 |
| CVR | 2 | 1370 | 0 |
| AXAS | 5 | 289 | -2 |
| ENG | 1 | 446 | 0 |
| Average | 2.25 | 527 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.25 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $1 million in INOD’s case. Abraxas Petroleum Corp. (NASDAQ:AXAS) is the most popular stock in this table. On the other hand Zomedica Pharmaceuticals Corp. (NYSE:ZOM) is the least popular one with only 1 bullish hedge fund positions. Innodata Inc (NASDAQ:INOD) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on INOD as the stock returned 80% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
