How International Flavors & Fragrances Inc (IFF) Stacks Up Against Its Peers

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30. In this article we look at what those investors think of International Flavors & Fragrances Inc (NYSE:IFF).

International Flavors & Fragrances Inc (NYSE:IFF) saw a decrease in hedge fund interest last quarter. IFF was in 16 hedge funds’ portfolios at the end of September. By comparison, there had been 20 hedge funds in our database with IFF positions at the end of June. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Martin Marietta Materials, Inc. (NYSE:MLM), Masco Corporation (NYSE:MAS), and Maxim Integrated Products Inc. (NASDAQ:MXIM) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

With all of this in mind, let’s take a peek at the new action surrounding International Flavors & Fragrances Inc (NYSE:IFF).

How are hedge funds trading International Flavors & Fragrances Inc (NYSE:IFF)?

At Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, down by 20% from the second quarter of 2016. On the other hand, there were a total of 15 hedge funds with a bullish position in IFF at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, GAMCO Investors, led by Mario Gabelli, holds the most valuable position in International Flavors & Fragrances Inc (NYSE:IFF). GAMCO Investors has a $144.3 million position in the stock, comprising 0.9% of its 13F portfolio. The second most bullish fund is Paul Marshall and Ian Wace’s Marshall Wace LLP holding a $34 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Renaissance Technologies, one of the largest hedge funds in the world and Phill Gross and Robert Atchinson’s Adage Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that cut their entire stakes in the stock during the third quarter. At the top of the heap, D E Shaw cut the biggest stake of the 700 funds watched by Insider Monkey, valued at an estimated $4.1 million in stock, and George Hall’s Clinton Group was right behind this move, as the fund dumped about $2.7 million worth of shares.

Let’s now review 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 Martin Marietta Materials, Inc. (NYSE:MLM), Masco Corporation (NYSE:MAS), Maxim Integrated Products Inc. (NASDAQ:MXIM), and First Republic Bank (NYSE:FRC). All of these stocks’ market caps are closest to IFF’s market cap.

As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $875 million, versus $270 million in IFF’s case. Masco Corporation (NYSE:MAS) is the most popular stock in this table. On the other hand First Republic Bank (NYSE:FRC) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks International Flavors & Fragrances Inc (NYSE:IFF) is even less popular than First Republic Bank (NYSE:FRC). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: none