If you were to ask many of your fellow readers, hedge funds are viewed as overrated, old investment tools of an era lost to time. Although there are more than 8,000 hedge funds trading today, Insider Monkey looks at the elite of this club, about 525 funds. Analysts calculate that this group controls the majority of the hedge fund industry's total assets, and by paying attention to their highest performing investments, we've spotted a number of investment strategies that have historically outstripped the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (find a sample of our picks).
Equally as useful, positive insider trading activity is another way to look at the investments you're interested in. As the old adage goes: there are many incentives for an upper level exec to downsize shares of his or her company, but just one, very simple reason why they would buy. Various academic studies have demonstrated the impressive potential of this tactic if you know what to do (learn more here).
Thus, it's important to discuss the recent info about InterContinental Hotels Group PLC (ADR) (NYSE:IHG).
In preparation for the third quarter, a total of 12 of the hedge funds we track were long in this stock, a change of 20% from one quarter earlier. With hedge funds' sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings substantially.
When using filings from the hedgies we track, Echo Street Capital Management, managed by Greg Poole, holds the most valuable position in InterContinental Hotels Group PLC (ADR) (NYSE:IHG). Echo Street Capital Management has a $7.4 million position in the stock, comprising 1.1% of its 13F portfolio. Coming in second is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which held a $7 million position; 0.1% of its 13F portfolio is allocated to the stock. Other hedgies that are bullish include Jim Simons's Renaissance Technologies, D. E. Shaw's D E Shaw and Israel Englander's Millennium Management.
As aggregate interest spiked, particular hedge funds have been driving this bullishness. Echo Street Capital Management, managed by Greg Poole, created the biggest position in InterContinental Hotels Group PLC (ADR) (NYSE:IHG). Echo Street Capital Management had 7.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also initiated a $7 million position during the quarter. The other funds with new positions in the stock are Jim Simons's Renaissance Technologies, D. E. Shaw's D E Shaw, and Israel Englander's Millennium Management.
Insider buying made by high-level executives is at its handiest when the company we're looking at has seen transactions within the past six months. Over the latest six-month time frame, InterContinental Hotels Group PLC (ADR) (NYSE:IHG) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).
We'll check out the relationship between both of these indicators in other stocks similar to InterContinental Hotels Group PLC (ADR) (NYSE:IHG). These stocks are Marriott International Inc (NYSE:MAR), Starwood Hotels & Resorts Worldwide, Inc (NYSE:HOT), Hyatt Hotels Corporation (NYSE:H), Wyndham Worldwide Corporation (NYSE:WYN), and Expedia Inc (NASDAQ:EXPE). This group of stocks are the members of the lodging industry and their market caps resemble IHG's market cap.