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How Intrepid Potash, Inc. (IPI) Stacks Up Against Its Peers

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At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

Intrepid Potash, Inc. (NYSE:IPI) has seen a decrease in hedge fund interest of late. There were 8 hedge funds in our database with IPI holdings at the end of the second quarter, 2 more than there were a quarter later. At the end of this article we will also compare IPI to other stocks including Richardson Electronics, Ltd. (NASDAQ:RELL), Recro Pharma Inc (NASDAQ:REPH), and USA Truck, Inc. (NASDAQ:USAK) to get a better sense of its popularity.

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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

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What does the smart money think about Intrepid Potash, Inc. (NYSE:IPI)?

Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a fall of 25% from the second quarter of 2016, and the fourth-straight quarter with a decline in the number of bullish hedge fund positions. The graph below displays the number of hedge funds with bullish positions in IPI over the last 5 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

HedgeFundSentimentChart

According to Insider Monkey’s hedge fund database, Renaissance Technologies, one of the largest hedge funds in the world, has the biggest position in Intrepid Potash, Inc. (NYSE:IPI), worth close to $4 million. The second most bullish fund manager is David E. Shaw’s D E Shaw, holding a $2.4 million position. Other professional money managers with similar optimism include Chuck Royce’s Royce & Associates, Israel Englander’s Millennium Management, and John Overdeck and David Siegel’s Two Sigma Advisors. 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-micro-cap stocks.

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