Is Inter Parfums, Inc. (IPAR) A Good Stock To Buy?

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Inter Parfums, Inc. (NASDAQ:IPAR) from the perspective of those elite funds.

Is Inter Parfums, Inc. (NASDAQ:IPAR) an exceptional stock to buy now? Hedge funds are getting less optimistic. The number of long hedge fund bets were cut by 5 lately. Inter Parfums, Inc. (NASDAQ:IPAR) was in 6 hedge funds’ portfolios at the end of the third quarter of 2015. There were 11 hedge funds in our database with Inter Parfums, Inc. (NASDAQ:IPAR) positions at the end of the previous quarter. For those who are in the know, it might not come as a surprise, as the shares of the company were down 26.88% during the third quarter. Despite the drop in hedge fund interest, we will try to find out about hedge funds holding positions in the company at the end of the previous 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 K2M Group Holdings Inc (NASDAQ:KTWO), James River Group Holdings Ltd (NASDAQ:JRVR), and Kforce Inc. (NASDAQ:KFRC) to gather more data points.

If you’d ask most traders, hedge funds are perceived as unimportant, outdated financial tools of yesteryear. While there are greater than 8000 funds trading at present, Our experts look at the elite of this group, approximately 700 funds. These money managers direct the majority of all hedge funds’ total asset base, and by tracking their finest stock picks, Insider Monkey has revealed numerous investment strategies that have historically outperformed the broader indices. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points annually for a decade in their back tests.

With all of this in mind, we’re going to analyze the key action surrounding Inter Parfums, Inc. (NASDAQ:IPAR).

Hedge fund activity in Inter Parfums, Inc. (NASDAQ:IPAR)

Heading into Q4, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 45% from the previous quarter. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the most valuable position in Inter Parfums, Inc. (NASDAQ:IPAR), worth close to $8.2 million, comprising less than 0.1% of its total 13F portfolio. The second most bullish fund manager is Murray Stahl of Horizon Asset Management, with a $6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers that hold long positions consist of Renaissance Technologies, Peter Muller’s PDT Partners, and Ken Griffin’s Citadel Investment Group.

Because Inter Parfums, Inc. (NASDAQ:IPAR) has witnessed a declining sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few hedge funds who were dropping their positions entirely heading into Q4. It’s worth mentioning that Joel Greenblatt’s Gotham Asset Management dumped the largest stake of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $2.6 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund cut about $0.5 million worth of shares. These bearish behaviors are interesting, as total hedge fund interest fell by 5 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Inter Parfums, Inc. (NASDAQ:IPAR) but similarly valued. We will take a look at K2M Group Holdings Inc (NASDAQ:KTWO), James River Group Holdings Ltd (NASDAQ:JRVR), and Kforce Inc. (NASDAQ:KFRC). This group of stocks’ market values match Inter Parfums, Inc. (NASDAQ:IPAR)’s market value.

As you can see, these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $188 million. That figure was $20 million in Inter Parfums, Inc. (NASDAQ:IPAR)’s case. Kforce Inc. (NASDAQ:KFRC) is the most popular stock in this table. On the other hand, K2M Group Holdings Inc (NASDAQ:KTWO) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks, Inter Parfums, Inc. (NASDAQ:IPAR) is even less popular than K2M Group Holdings Inc (NASDAQ:KTWO). 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. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.