Is InterDigital, Inc. (IDCC) Going to Burn These Hedge Funds?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider InterDigital, Inc. (NASDAQ:IDCC) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

InterDigital, Inc. (NASDAQ:IDCC) was in 19 hedge funds’ portfolios at the end of June. The all time high for this statistic is 27. IDCC has seen an increase in enthusiasm from smart money in recent months. There were 15 hedge funds in our database with IDCC positions at the end of the first quarter. Our calculations also showed that IDCC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

John Overdeck of Two Sigma Advisors

Now let’s take a look at the recent hedge fund action surrounding InterDigital, Inc. (NASDAQ:IDCC).

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

At Q2’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from one quarter earlier. By comparison, 23 hedge funds held shares or bullish call options in IDCC a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of InterDigital, Inc. (NASDAQ:IDCC), with a stake worth $66.1 million reported as of the end of June. Trailing Renaissance Technologies was Shannon River Fund Management, which amassed a stake valued at $44.9 million. D E Shaw, Royce & Associates, and Two Sigma Advisors 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 Shannon River Fund Management allocated the biggest weight to InterDigital, Inc. (NASDAQ:IDCC), around 3.25% of its 13F portfolio. Rubric Capital Management is also relatively very bullish on the stock, designating 0.16 percent of its 13F equity portfolio to IDCC.

Consequently, key money managers have been driving this bullishness. PEAK6 Capital Management, managed by Matthew Hulsizer, assembled the biggest call position in InterDigital, Inc. (NASDAQ:IDCC). PEAK6 Capital Management had $2.4 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $1.5 million position during the quarter. The other funds with brand new IDCC positions are Mika Toikka’s AlphaCrest Capital Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Qing Li’s Sciencast Management.

Let’s go over hedge fund activity in other stocks similar to InterDigital, Inc. (NASDAQ:IDCC). We will take a look at Century Communities, Inc (NYSE:CCS), Gray Television, Inc. (NYSE:GTN), Silicon Motion Technology Corp. (NASDAQ:SIMO), Urban Edge Properties (NYSE:UE), Aeva Technologies, Inc. (NYSE:AEVA), Apollo Commercial Real Est. Finance Inc (NYSE:ARI), and Black Stone Minerals LP (NYSE:BSM). This group of stocks’ market caps are similar to IDCC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.9 hedge funds with bullish positions and the average amount invested in these stocks was $181 million. That figure was $195 million in IDCC’s case. Century Communities, Inc (NYSE:CCS) is the most popular stock in this table. On the other hand Black Stone Minerals LP (NYSE:BSM) is the least popular one with only 6 bullish hedge fund positions. InterDigital, Inc. (NASDAQ:IDCC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IDCC is 64.3. 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately IDCC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on IDCC were disappointed as the stock returned -5.8% since the end of June (through 10/22) 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.