Is International Flavors & Fragrances Inc (IFF) A Good Stock To Buy?

We at Insider Monkey have gone over 873 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th. In this article, we look at what those funds think of International Flavors & Fragrances Inc (NYSE:IFF) based on that data.

Is International Flavors & Fragrances Inc (NYSE:IFF) a buy here? Investors who are in the know were in a pessimistic mood. The number of bullish hedge fund positions dropped by 3 recently. International Flavors & Fragrances Inc (NYSE:IFF) was in 52 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 55. Our calculations also showed that IFF isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 55 hedge funds in our database with IFF holdings at the end of March.

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.

Scott Ferguson of Sachem Head 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. With all of this in mind we’re going to take a look at the new hedge fund action encompassing International Flavors & Fragrances Inc (NYSE:IFF).

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

At the end of June, a total of 52 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards IFF over the last 24 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

Among these funds, Sachem Head Capital held the most valuable stake in International Flavors & Fragrances Inc (NYSE:IFF), which was worth $972.5 million at the end of the second quarter. On the second spot was Laurion Capital Management which amassed $535.6 million worth of shares. Baupost Group, First Pacific Advisors LLC, and Gates 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 Sachem Head Capital allocated the biggest weight to International Flavors & Fragrances Inc (NYSE:IFF), around 25.19% of its 13F portfolio. Covalis Capital is also relatively very bullish on the stock, dishing out 7.43 percent of its 13F equity portfolio to IFF.

Because International Flavors & Fragrances Inc (NYSE:IFF) has faced a decline in interest from the aggregate hedge fund industry, we can see that there exists a select few funds that decided to sell off their full holdings in the second quarter. At the top of the heap, David S. Winter and David J. Millstone’s 40 North Management cut the largest stake of all the hedgies followed by Insider Monkey, worth close to $189.9 million in stock. John Smith Clark’s fund, Southpoint Capital Advisors, also dropped its stock, about $134.9 million worth. These transactions are important to note, as total hedge fund interest was cut by 3 funds in the second quarter.

Let’s check out hedge fund activity in other stocks similar to International Flavors & Fragrances Inc (NYSE:IFF). These stocks are General Mills, Inc. (NYSE:GIS), Peloton Interactive, Inc. (NASDAQ:PTON), The Trade Desk, Inc. (NASDAQ:TTD), Motorola Solutions Inc (NYSE:MSI), Barrick Gold Corporation (NYSE:GOLD), Cognizant Technology Solutions Corp (NASDAQ:CTSH), and AFLAC Incorporated (NYSE:AFL). This group of stocks’ market valuations match IFF’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 41 hedge funds with bullish positions and the average amount invested in these stocks was $1937 million. That figure was $3290 million in IFF’s case. Peloton Interactive, Inc. (NASDAQ:PTON) is the most popular stock in this table. On the other hand The Trade Desk, Inc. (NASDAQ:TTD) is the least popular one with only 25 bullish hedge fund positions. International Flavors & Fragrances Inc (NYSE:IFF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IFF is 62.5. 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 IFF wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on IFF were disappointed as the stock returned -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.

Suggested Articles:

• 15 Best Blue Chip Stocks To Buy Now
• 11 Best T-Shirt Design Websites
• 10 Most Anticipated IPOs in 2021 and 2022

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