Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in IHS Markit Ltd. (NASDAQ:INFO)? The smart money sentiment can provide an answer to this question.
Is IHS Markit Ltd. (NASDAQ:INFO) a buy, sell, or hold? Investors who are in the know were in a bullish mood. The number of long hedge fund bets advanced by 15 in recent months. IHS Markit Ltd. (NASDAQ:INFO) was in 59 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 44. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that INFO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 44 hedge funds in our database with INFO positions at the end of the third quarter.
In the 21st century investor’s toolkit there are plenty of indicators shareholders employ to grade publicly traded companies. Two of the most under-the-radar indicators are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best investment managers can outclass the S&P 500 by a healthy amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .
Matthew Halbower of Pentwater Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a peek at the fresh hedge fund action surrounding IHS Markit Ltd. (NASDAQ:INFO).
Do Hedge Funds Think INFO Is A Good Stock To Buy Now?
At fourth quarter’s end, a total of 59 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 34% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards INFO over the last 22 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
Among these funds, Select Equity Group held the most valuable stake in IHS Markit Ltd. (NASDAQ:INFO), which was worth $379.6 million at the end of the fourth quarter. On the second spot was Citadel Investment Group which amassed $325.3 million worth of shares. Pentwater Capital Management, D E Shaw, and Millennium Management 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 ROAM Global Management allocated the biggest weight to IHS Markit Ltd. (NASDAQ:INFO), around 22.36% of its 13F portfolio. Sand Grove Capital Partners is also relatively very bullish on the stock, designating 12.23 percent of its 13F equity portfolio to INFO.
Consequently, some big names have jumped into IHS Markit Ltd. (NASDAQ:INFO) headfirst. Pentwater Capital Management, managed by Matthew Halbower, established the biggest position in IHS Markit Ltd. (NASDAQ:INFO). Pentwater Capital Management had $281.2 million invested in the company at the end of the quarter. James Parsons’s Junto Capital Management also initiated a $88.5 million position during the quarter. The other funds with new positions in the stock are Clint Carlson’s Carlson Capital, Robert Emil Zoellner’s Alpine Associates, and John Brennan’s Sirios Capital Management.
Let’s now review hedge fund activity in other stocks similar to IHS Markit Ltd. (NASDAQ:INFO). We will take a look at SYSCO Corporation (NYSE:SYY), Freeport-McMoRan Inc. (NYSE:FCX), Liberty Broadband Corp (NASDAQ:LBRDA), Biogen Inc. (NASDAQ:BIIB), The Trade Desk, Inc. (NASDAQ:TTD), The Bank of New York Mellon Corporation (NYSE:BK), and Microchip Technology Incorporated (NASDAQ:MCHP). This group of stocks’ market values match INFO’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SYY | 40 | 2513070 | 7 |
| FCX | 61 | 2664729 | 4 |
| LBRDA | 26 | 908617 | 1 |
| BIIB | 63 | 2752928 | 4 |
| TTD | 35 | 1195309 | 12 |
| BK | 47 | 4689872 | -1 |
| MCHP | 45 | 961474 | 10 |
| Average | 45.3 | 2240857 | 5.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 45.3 hedge funds with bullish positions and the average amount invested in these stocks was $2241 million. That figure was $2489 million in INFO’s case. Biogen Inc. (NASDAQ:BIIB) is the most popular stock in this table. On the other hand Liberty Broadband Corp (NASDAQ:LBRDA) is the least popular one with only 26 bullish hedge fund positions. IHS Markit Ltd. (NASDAQ:INFO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for INFO is 84.6. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on INFO as the stock returned 20.3% since the end of Q4 (through 4/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
