While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding International Flavors & Fragrances Inc (NYSE:IFF).
International Flavors & Fragrances Inc (NYSE:IFF) investors should be aware of a decrease in enthusiasm from smart money of late. International Flavors & Fragrances Inc (NYSE:IFF) was in 46 hedge funds’ portfolios at the end of September. The all time high for this statistic is 55. Our calculations also showed that IFF 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. Now let’s view the recent hedge fund action regarding International Flavors & Fragrances Inc (NYSE:IFF).
Do Hedge Funds Think IFF Is A Good Stock To Buy Now?
At the end of September, a total of 46 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -12% from the previous quarter. On the other hand, there were a total of 31 hedge funds with a bullish position in IFF a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Scott Ferguson’s Sachem Head Capital has the most valuable position in International Flavors & Fragrances Inc (NYSE:IFF), worth close to $870.4 million, corresponding to 21.5% of its total 13F portfolio. The second largest stake is held by Benjamin A. Smith of Laurion Capital Management, with a $482 million position; the fund has 2% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish contain Seth Klarman’s Baupost Group, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC and Jeffrey Gates’s Gates Capital Management. In terms of the portfolio weights assigned to each position Sachem Head Capital allocated the biggest weight to International Flavors & Fragrances Inc (NYSE:IFF), around 21.46% of its 13F portfolio. Albar Capital is also relatively very bullish on the stock, designating 12.72 percent of its 13F equity portfolio to IFF.
Because International Flavors & Fragrances Inc (NYSE:IFF) has experienced a decline in interest from hedge fund managers, logic holds that there is a sect of hedgies who were dropping their entire stakes last quarter. Interestingly, Andreas Halvorsen’s Viking Global dumped the largest investment of the 750 funds followed by Insider Monkey, comprising an estimated $76 million in stock, and D. E. Shaw’s D E Shaw was right behind this move, as the fund cut about $67.9 million worth. These moves are important to note, as total hedge fund interest fell by 6 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as International Flavors & Fragrances Inc (NYSE:IFF) but similarly valued. These stocks are CoStar Group Inc (NASDAQ:CSGP), PPG Industries, Inc. (NYSE:PPG), BeiGene, Ltd. (NASDAQ:BGNE), Xcel Energy Inc (NYSE:XEL), The Trade Desk, Inc. (NASDAQ:TTD), Archer Daniels Midland Company (NYSE:ADM), and Old Dominion Freight Line (NASDAQ:ODFL). This group of stocks’ market valuations are similar to IFF’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CSGP | 29 | 2585035 | -20 |
| PPG | 30 | 318414 | 4 |
| BGNE | 16 | 6418381 | -5 |
| XEL | 26 | 498007 | 4 |
| TTD | 19 | 499103 | -6 |
| ADM | 27 | 351486 | -14 |
| ODFL | 33 | 709810 | -14 |
| Average | 25.7 | 1625748 | -7.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.7 hedge funds with bullish positions and the average amount invested in these stocks was $1626 million. That figure was $2838 million in IFF’s case. Old Dominion Freight Line (NASDAQ:ODFL) is the most popular stock in this table. On the other hand BeiGene, Ltd. (NASDAQ:BGNE) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks International Flavors & Fragrances Inc (NYSE:IFF) is more popular among hedge funds. Our overall hedge fund sentiment score for IFF is 74.1. 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 28.6% in 2021 through November 30th and still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on IFF, though not to the same extent, as the stock returned 6.3% since the end of September (through November 30th) and outperformed the market as well.
Follow International Flavors & Fragrances Inc (NYSE:IFF)
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Disclosure: None. This article was originally published at Insider Monkey.
