Is Intercontinental Exchange Inc (ICE) A Good Stock To Buy?

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Intercontinental Exchange Inc (NYSE:ICE).

Is ICE a good stock to buy? Intercontinental Exchange Inc (NYSE:ICE) shareholders have witnessed a decrease in hedge fund sentiment recently. Intercontinental Exchange Inc (NYSE:ICE) was in 47 hedge funds’ portfolios at the end of June. The all time high for this statistic is 64. There were 58 hedge funds in our database with ICE positions at the end of the first quarter. Our calculations also showed that ICE isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Matthew Hulsizer of PEAK6 Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s take a look at the fresh hedge fund action encompassing Intercontinental Exchange Inc (NYSE:ICE).

Do Hedge Funds Think ICE Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the first quarter of 2020. By comparison, 60 hedge funds held shares or bullish call options in ICE a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Cantillon Capital Management was the largest shareholder of Intercontinental Exchange Inc (NYSE:ICE), with a stake worth $498.6 million reported as of the end of June. Trailing Cantillon Capital Management was Alkeon Capital Management, which amassed a stake valued at $398.3 million. D E Shaw, Ako Capital, and Echo Street Capital 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 Truvvo Partners allocated the biggest weight to Intercontinental Exchange Inc (NYSE:ICE), around 30.37% of its 13F portfolio. Crescent Park Management is also relatively very bullish on the stock, setting aside 6.06 percent of its 13F equity portfolio to ICE.

Seeing as Intercontinental Exchange Inc (NYSE:ICE) has experienced declining sentiment from the smart money, we can see that there was a specific group of money managers that elected to cut their positions entirely last quarter. Interestingly, James Parsons’s Junto Capital Management dumped the largest position of the 750 funds monitored by Insider Monkey, valued at close to $91.2 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund dumped about $27.2 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 11 funds last quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Intercontinental Exchange Inc (NYSE:ICE) but similarly valued. We will take a look at Norfolk Southern Corp. (NYSE:NSC), Bank of Montreal (NYSE:BMO), Edwards Lifesciences Corporation (NYSE:EW), Atlassian Corporation Plc (NASDAQ:TEAM), Autodesk, Inc. (NASDAQ:ADSK), The Southern Company (NYSE:SO), and Air Products & Chemicals, Inc. (NYSE:APD). This group of stocks’ market caps are similar to ICE’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 46 hedge funds with bullish positions and the average amount invested in these stocks was $1729 million. That figure was $2946 million in ICE’s case. Atlassian Corporation Plc (NASDAQ:TEAM) is the most popular stock in this table. On the other hand Bank of Montreal (NYSE:BMO) is the least popular one with only 12 bullish hedge fund positions. Intercontinental Exchange Inc (NYSE:ICE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ICE is 49.7. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.9% in 2021 through October 1st and beat the market again by 5.6 percentage points. Unfortunately ICE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ICE were disappointed as the stock returned -2.5% since the end of June (through 10/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.