Looking for stocks with high upside potential? Just follow the big players within the hedge fund industry. Why should you do so? Let’s take a brief look at what statistics have to say about hedge funds’ stock picking abilities to illustrate. The Standard and Poor’s 500 Index returned approximately 26% in 2019 (through November 22nd). Conversely, hedge funds’ 20 preferred S&P 500 stocks generated a return of nearly 35% during the same period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds’ consensus stock picks generate superior risk-adjusted returns. That’s why we believe it is wise to check hedge fund activity before you invest your time or your savings on a stock like Investors Title Company (NASDAQ:ITIC).
Investors Title Company (NASDAQ:ITIC) has experienced an increase in hedge fund interest recently. ITIC was in 4 hedge funds’ portfolios at the end of the third quarter of 2019. There were 3 hedge funds in our database with ITIC positions at the end of the previous quarter. Our calculations also showed that ITIC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most stock holders, hedge funds are perceived as unimportant, old investment vehicles of years past. While there are greater than 8000 funds trading at present, Our experts hone in on the leaders of this group, around 750 funds. These money managers oversee the lion’s share of the hedge fund industry’s total capital, and by monitoring their first-class equity investments, Insider Monkey has found numerous investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Tom Gayner of Markel Gayner Asset Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now let’s take a peek at the latest hedge fund action encompassing Investors Title Company (NASDAQ:ITIC).
Hedge fund activity in Investors Title Company (NASDAQ:ITIC)
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ITIC over the last 17 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Markel Gayner Asset Management, managed by Tom Gayner, holds the number one position in Investors Title Company (NASDAQ:ITIC). Markel Gayner Asset Management has a $34.1 million position in the stock, comprising 0.5% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, which holds a $3.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish comprise Israel Englander’s Millennium Management, Chuck Royce’s Royce & Associates and . In terms of the portfolio weights assigned to each position Markel Gayner Asset Management allocated the biggest weight to Investors Title Company (NASDAQ:ITIC), around 0.52% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.0032 percent of its 13F equity portfolio to ITIC.
Consequently, key money managers were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the largest position in Investors Title Company (NASDAQ:ITIC). Millennium Management had $0.5 million invested in the company at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Investors Title Company (NASDAQ:ITIC) but similarly valued. We will take a look at NN, Inc. (NASDAQ:NNBR), Minerva Neurosciences, Inc (NASDAQ:NERV), Southern First Bancshares, Inc. (NASDAQ:SFST), and Alphatec Holdings Inc (NASDAQ:ATEC). All of these stocks’ market caps resemble ITIC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NNBR | 5 | 36968 | -1 |
| NERV | 10 | 28964 | 1 |
| SFST | 5 | 33274 | -2 |
| ATEC | 8 | 34122 | 3 |
| Average | 7 | 33332 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $38 million in ITIC’s case. Minerva Neurosciences, Inc (NASDAQ:NERV) is the most popular stock in this table. On the other hand NN, Inc. (NASDAQ:NNBR) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Investors Title Company (NASDAQ:ITIC) is even less popular than NNBR. Hedge funds dodged a bullet by taking a bearish stance towards ITIC. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ITIC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ITIC investors were disappointed as the stock returned 5.4% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
