Were Hedge Funds Right About Interactive Brokers Group, Inc. (IBKR)?

Technology stocks had a lousy start to 2022. QQQ lost 9% of its value in January. Pandemic winners are getting crushed while energy stocks are surging. Roblox lost 36%, Moderna lost 33%, and Carvana and Shopify lost 30% of their values in January. We aren’t certain about the bubbly technology stocks that trade for ridiculously high multiples of their revenues, but we believe top hedge fund stocks will deliver positive returns for the rest of the year. In this article, we will take a closer look at hedge fund sentiment towards Interactive Brokers Group, Inc. (NASDAQ:IBKR) at the end of the third quarter and determine whether the smart money was really smart about this stock.

Interactive Brokers Group, Inc. (NASDAQ:IBKR) has seen a decrease in support from the world’s most elite money managers in recent months. Interactive Brokers Group, Inc. (NASDAQ:IBKR) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 37. There were 36 hedge funds in our database with IBKR positions at the end of the second quarter. Our calculations also showed that IBKR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

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 analyze the new hedge fund action regarding Interactive Brokers Group, Inc. (NASDAQ:IBKR).

Paul Marshall of Marshall Wace

Do Hedge Funds Think IBKR Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the second quarter of 2021. By comparison, 28 hedge funds held shares or bullish call options in IBKR a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Select Equity Group held the most valuable stake in Interactive Brokers Group, Inc. (NASDAQ:IBKR), which was worth $361.4 million at the end of the third quarter. On the second spot was Bares Capital Management which amassed $323.5 million worth of shares. Cantillon Capital Management, Ancient Art (Teton Capital), and Marshall Wace LLP were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ancient Art (Teton Capital) allocated the biggest weight to Interactive Brokers Group, Inc. (NASDAQ:IBKR), around 11.42% of its 13F portfolio. Owls Nest Partners is also relatively very bullish on the stock, dishing out 9.55 percent of its 13F equity portfolio to IBKR.

Judging by the fact that Interactive Brokers Group, Inc. (NASDAQ:IBKR) has experienced declining sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of money managers who sold off their positions entirely last quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dumped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $21.8 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also dumped its stock, about $5.4 million worth. These moves are important to note, as total hedge fund interest was cut by 5 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Interactive Brokers Group, Inc. (NASDAQ:IBKR). These stocks are Energy Transfer L.P. (NYSE:ET), ONEOK, Inc. (NYSE:OKE), Generac Holdings Inc. (NYSE:GNRC), Consolidated Edison, Inc. (NYSE:ED), Albemarle Corporation (NYSE:ALB), ViacomCBS Inc. (NASDAQ:VIAC), and Canon Inc. (NYSE:CAJ). This group of stocks’ market caps are closest to IBKR’s market cap.

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As you can see these stocks had an average of 31.4 hedge funds with bullish positions and the average amount invested in these stocks was $511 million. That figure was $1477 million in IBKR’s case. ViacomCBS Inc. (NASDAQ:VIAC) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 8 bullish hedge fund positions. Interactive Brokers Group, Inc. (NASDAQ:IBKR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IBKR is 45.7. 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 gained 29.6% in 2021 and still beat the market by 3.6 percentage points. A small number of hedge funds were also right about betting on IBKR as the stock returned 9.5% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.