InterContinental Hotels Group PLC (ADR) (NYSE:IHG) investors should pay attention to a decrease in enthusiasm from smart money lately.
If you'd ask most traders, hedge funds are assumed to be underperforming, old investment tools of yesteryear. While there are over 8000 funds with their doors open at present, we at Insider Monkey hone in on the elite of this club, about 450 funds. Most estimates calculate that this group controls most of the smart money's total capital, and by tracking their highest performing stock picks, we have found a number of investment strategies that have historically outperformed Mr. Market. Our small-cap hedge fund strategy beat 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 outclassed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).
Equally as beneficial, bullish insider trading activity is another way to break down the financial markets. There are plenty of incentives for a corporate insider to sell shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several empirical studies have demonstrated the market-beating potential of this tactic if "monkeys" know what to do (learn more here).
Keeping this in mind, let's take a peek at the key action surrounding InterContinental Hotels Group PLC (ADR) (NYSE:IHG).
At Q1's end, a total of 10 of the hedge funds we track were long in this stock, a change of -29% from one quarter earlier. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes significantly.
Of the funds we track, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the largest position in InterContinental Hotels Group PLC (ADR) (NYSE:IHG). Arrowstreet Capital has a $14.3 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $11.6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining hedgies with similar optimism include Claes Fornell's CSat Investment Advisory, Greg Poole's Echo Street Capital Management and D. E. Shaw's D E Shaw.
Because InterContinental Hotels Group PLC (ADR) (NYSE:IHG) has witnessed declining sentiment from the aggregate hedge fund industry, it's easy to see that there is a sect of hedgies who were dropping their entire stakes heading into Q2. Interestingly, Jeff Lignelli's Incline Global Management cut the biggest investment of the "upper crust" of funds we monitor, totaling about $3.5 million in stock., and Eric Semler of TCS Capital Management was right behind this move, as the fund said goodbye to about $1.7 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 4 funds heading into Q2.
Insider buying is at its handiest when the company we're looking at has seen transactions within the past six months. Over the last half-year time period, InterContinental Hotels Group PLC (ADR) (NYSE:IHG) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let's also take a look at hedge fund and insider activity 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 belong to the lodging industry and their market caps resemble IHG's market cap.