How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Independence Holding Company (NYSE:IHC) and determine whether hedge funds had an edge regarding this stock.
Is Independence Holding Company (NYSE:IHC) a cheap investment right now? Money managers were in an optimistic mood. The number of bullish hedge fund positions rose by 33 recently. Independence Holding Company (NYSE:IHC) was in 40 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 7. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that IHC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 7 hedge funds in our database with IHC holdings at the end of June.
Ryan Tolkin, CIO of Schonfeld Strategic Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind let’s review the new hedge fund action surrounding Independence Holding Company (NYSE:IHC).
Do Hedge Funds Think IHC Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 471% from the previous quarter. By comparison, 5 hedge funds held shares or bullish call options in IHC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Independence Holding Company (NYSE:IHC) was held by Cannell Capital, which reported holding $30.1 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $22.7 million position. Other investors bullish on the company included Adage Capital Management, Schonfeld Strategic Advisors, and Vista Equity Partners. In terms of the portfolio weights assigned to each position Cannell Capital allocated the biggest weight to Independence Holding Company (NYSE:IHC), around 4.97% of its 13F portfolio. Indaba Capital Management is also relatively very bullish on the stock, designating 0.52 percent of its 13F equity portfolio to IHC.
As one would reasonably expect, key money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the most valuable position in Independence Holding Company (NYSE:IHC). Citadel Investment Group had $22.7 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $22.1 million position during the quarter. The other funds with brand new IHC positions are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Robert Smith’s Vista Equity Partners, and Jimmy Levin’s Sculptor Capital.
Let’s go over hedge fund activity in other stocks similar to Independence Holding Company (NYSE:IHC). We will take a look at Movado Group, Inc (NYSE:MOV), Plymouth Industrial REIT, Inc. (NYSE:PLYM), TravelCenters of America Inc. (NYSE:TA), Central Pacific Financial Corp. (NYSE:CPF), Renalytix AI plc (NASDAQ:RNLX), PAVmed Inc. (NASDAQ:PAVM), and TCG BDC, Inc. (NASDAQ:CGBD). All of these stocks’ market caps are closest to IHC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MOV | 10 | 48995 | -5 |
| PLYM | 11 | 37197 | 1 |
| TA | 16 | 134869 | 9 |
| CPF | 13 | 34080 | 3 |
| RNLX | 5 | 15303 | -5 |
| PAVM | 8 | 7320 | 1 |
| CGBD | 11 | 36238 | 1 |
| Average | 10.6 | 44857 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.6 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $317 million in IHC’s case. TravelCenters of America Inc. (NYSE:TA) is the most popular stock in this table. On the other hand Renalytix AI plc (NASDAQ:RNLX) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Independence Holding Company (NYSE:IHC) is more popular among hedge funds. Our overall hedge fund sentiment score for IHC is 90. 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. 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 returned 29.6% in 2021 and managed to beat the market by another 3.6 percentage points. Hedge funds were also right about betting on IHC as the stock returned 15.3% since the end of September (through 1/31) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Independence Holding Co (NYSE:IHC)
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Disclosure: None. This article was originally published at Insider Monkey.
