It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like ITC Holdings Corp. (NYSE:ITC).
Hedge fund interest in ITC Holdings Corp. (NYSE:ITC) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Ashland Inc. (NYSE:ASH), Huntington Bancshares Incorporated (NASDAQ:HBAN), and CoStar Group Inc (NASDAQ:CSGP) to gather more data points.
Follow Itc Holdings Corp. (NYSE:ITC)
Follow Itc Holdings Corp. (NYSE:ITC)
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Now, let’s go over the latest action encompassing ITC Holdings Corp. (NYSE:ITC).
What does the smart money think about ITC Holdings Corp. (NYSE:ITC)?
At Q3’s end, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from one quarter earlier. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Brian Taylor’s Pine River Capital Management has the biggest position in ITC Holdings Corp. (NYSE:ITC), worth close to $318.2 million, comprising 5.5% of its total 13F portfolio. On Pine River Capital Management’s heels is Eton Park Capital, managed by Eric Mindich, which holds a $265.1 million position; 4.6% of its 13F portfolio is allocated to the company. Other professional money managers with similar optimism include Thomas Steyer’s Farallon Capital, James Dinan’s York Capital Management and Robert Emil Zoellner’s Alpine Associates.
Because ITC Holdings Corp. (NYSE:ITC) has witnessed no change in interest from hedge fund managers, we think it is important to take a look at a few money managers that elected to cut their entire stakes by the end of the third quarter. At the top of the heap, John Orrico’s Water Island Capital dumped the biggest position of all the hedgies tracked by Insider Monkey, comprising an estimated $105.1 million in stock, and Jean-Marie Eveillard’s First Eagle Investment Management was right behind this move, as the fund dumped about $94.9 million worth of ITC shares. These transactions are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ITC Holdings Corp. (NYSE:ITC) but similarly valued. We will take a look at Ashland Inc. (NYSE:ASH), Huntington Bancshares Incorporated (NASDAQ:HBAN), CoStar Group Inc (NASDAQ:CSGP), and Yandex NV (NASDAQ:YNDX). This group of stocks’ market valuations are similar to ITC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ASH | 30 | 726535 | 4 |
| HBAN | 32 | 463093 | 1 |
| CSGP | 20 | 304486 | 3 |
| YNDX | 31 | 389013 | 6 |
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $471 million. That figure was an impressive $1.77 billion in ITC’s case. Huntington Bancshares Incorporated (NASDAQ:HBAN) is the most popular stock in this table. On the other hand CoStar Group Inc (NASDAQ:CSGP) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks ITC Holdings Corp. (NYSE:ITC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
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