Between June 25 and October 30th the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 14 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor, and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of InterContinental Hotels Group PLC (ADR) (NYSE:IHG) and see how the stock is affected by the recent hedge fund activity.
InterContinental Hotels Group PLC (ADR) (NYSE:IHG) was in 12 hedge funds’ portfolios at the end of the third quarter of 2015. IHG has seen a decrease in support from the world’s most elite money managers recently. There were 13 hedge funds in our database with IHG holdings at the end of the previous quarter. 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 Michael Kors Holdings Ltd (NYSE:KORS), Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ), and Towers Watson & Co (NYSE:TW) to gather more data points.
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To most stock holders, hedge funds are assumed to be unimportant, old financial vehicles of the past. While there are over an 8,000 funds in operation today, We choose to focus on the moguls of this club, approximately 700 funds. Most estimates calculate that this group of people administer bulk of all hedge funds’ total asset base, and by paying attention to their highest performing equity investments, Insider Monkey has revealed many investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points annually for a decade in their back tests.
With all of this in mind, we’re going to review the fresh action regarding InterContinental Hotels Group PLC (ADR) (NYSE:IHG).
How have hedgies been trading InterContinental Hotels Group PLC (ADR) (NYSE:IHG)?
When looking at the institutional investors followed by Insider Monkey, Capital Growth Management, managed by Ken Heebner, holds the number one position in InterContinental Hotels Group PLC (ADR) (NYSE:IHG). Capital Growth Management has a $15.1 million position in the stock, comprising 0.5% of its 13F portfolio. Sitting at the No. 2 spot is Interval Partners, managed by Gregg Moskowitz, which holds a $6.6 million position; 0.8% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish comprise John Overdeck and David Siegel’s Two Sigma Advisors, Jim Simons’s Renaissance Technologies and Israel Englander’s Millennium Management.
Judging by the fact that InterContinental Hotels Group PLC (ADR) (NYSE:IHG) has experienced declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there were a few money managers that decided to sell off their entire stakes last quarter. At the top of the heap, Daniel S. Och’s OZ Management dumped the largest stake of the 700 funds watched by Insider Monkey, comprising about $14.3 million in stock. Ken Griffin’s fund, Citadel Investment Group, also dumped its stock, about $0.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to InterContinental Hotels Group PLC (ADR) (NYSE:IHG). These stocks are Michael Kors Holdings Ltd (NYSE:KORS), Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ), Towers Watson & Co (NYSE:TW), and JetBlue Airways Corporation (NASDAQ:JBLU). All of these stocks’ market caps resemble IHG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KORS | 30 | 972520 | -9 |
| JAZZ | 49 | 482958 | 8 |
| TW | 37 | 1225700 | 13 |
| JBLU | 42 | 714193 | -8 |
As you can see these stocks had an average of 39.5 hedge funds with bullish positions and the average amount invested in these stocks was $849 million. That figure was $38 million in IHG’s case. Jazz Pharmaceuticals plc – Ordinary Shares (NASDAQ:JAZZ) is the most popular stock in this table. On the other hand Michael Kors Holdings Ltd (NYSE:KORS) is the least popular one with only 30 bullish hedge fund positions. Compared to these stocks InterContinental Hotels Group PLC (ADR) (NYSE:IHG) is even less popular than KORS. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
