Is Intrawest Resorts Holdings Inc (SNOW) A Good Stock To Buy?

The equity market returns were very disappointing in the third quarter, “thanks” to the slowdown of China’s economy and the weaker-than-expected U.S. economic data. It was not entirely clear whether the broader market sell-off made U.S. equity valuations undervalued, but it definitely made them more attractive. It is worth mentioning that Russell 2000 ETF (IWM) underperformed the broad-market S&P 500 ETF by more than 14 percentage points during the period of June 25, 2015 through October 30, 2015. This clearly points to the fact that most investors, including hedge fund firms and institutional investors, heavily cut their exposure to high-potential (but seemingly riskier) small-cap stocks during the bloody third quarter. So let’s take a glance at the smart money sentiment towards Intrawest Resorts Holdings Inc (NYSE:SNOW) and see how it was affected.

Is Intrawest Resorts Holdings Inc the right pick for your portfolio? Hedge funds are turning less bullish. The number of long hedge fund positions shrunk by 2 recently. 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 Ladenburg Thalmann Financial Services (NYSEMKT:LTS), Student Transportation Inc (NASDAQ:STB), and Celyad SA (EBR:CYAD) to gather more data points.

At the moment there are dozens of signals investors have at their disposal to appraise publicly traded companies. A couple of the less utilized signals are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the best fund managers can outpace their index-focused peers by a significant margin (see the details here).

With all of this in mind, let’s take a look at the recent action regarding Intrawest Resorts Holdings Inc (NYSE:SNOW).

How have hedgies been trading Intrawest Resorts Holdings Inc (NYSE:SNOW)?

At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a reduction of 11% from the previous quarter. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Michael Novogratz’s Fortress Investment Group has the most valuable position in Intrawest Resorts Holdings Inc (NYSE:SNOW), worth close to $234.2 million, comprising 3.6% of its total 13F portfolio. On Fortress Investment Group’s heels is Renaissance Technologies, managed by Jim Simons, which holds a $7.7 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism comprise Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors, Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital and D. E. Shaw’s D E Shaw.

Seeing as Intrawest Resorts Holdings Inc (NYSE:SNOW) has experienced a declining sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of fund managers that elected to cut their positions entirely heading into Q4. Interestingly, Peter Muller’s PDT Partners dumped the biggest stake of all the hedgies monitored by Insider Monkey, totaling about $0.5 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund dumped about $0.5 million worth of stock. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to Intrawest Resorts Holdings Inc (NYSE:SNOW). We will take a look at Ladenburg Thalmann Financial Services (NYSEMKT:LTS), Student Transportation Inc (NASDAQ:STB), Celyad SA (EBR:CYAD), and Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR). This group of stocks’ market values match SNOW’s market value.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $261 million in SNOW’s case. Aegerion Pharmaceuticals, Inc. (NASDAQ:AEGR) is the most popular stock in this table. On the other hand Celyad SA (EBR:CYAD) is the least popular one with only 4 bullish hedge fund positions. Intrawest Resorts Holdings Inc (NYSE:SNOW) is not the most popular stock in this group, but hedge fund interest is still above average. Both metrics provide a positive signal, however, we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AEGR might be a better candidate to consider a long position.