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Should You Buy InterContinental Hotels Group PLC (ADR) (NYSE:IHG)? – Hyatt Hotels Corporation (NYSE:H), Starwood Hotels & Resorts Worldwide, Inc (NYSE:HOT)

Is InterContinental Hotels Group PLC (ADR) (NYSE:IHG) a first-rate investment right now? The smart money is taking an optimistic view. The number of long hedge fund positions improved by 1 recently.

In the eyes of most traders, hedge funds are viewed as worthless, outdated investment vehicles of the past. While there are more than 8000 funds in operation at the moment, we at Insider Monkey choose to focus on the crème de la crème of this club, around 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry’s total capital, and by watching their top picks, we have determined a number of investment strategies that have historically outpaced the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have trumped the S&P 500 index by 25 percentage points in 6.5 month (see the details here).

InterContinental Hotels Group PLC (ADR) (NYSE:IHG)

Just as beneficial, optimistic insider trading sentiment is another way to parse down the stock market universe. Obviously, there are a variety of stimuli for a corporate insider to cut shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several empirical studies have demonstrated the useful potential of this strategy if piggybackers know what to do (learn more here).

With all of this in mind, let’s take a gander at the key action regarding InterContinental Hotels Group PLC (ADR) (NYSE:IHG).

What does the smart money think about InterContinental Hotels Group PLC (ADR) (NYSE:IHG)?

Heading into 2013, a total of 13 of the hedge funds we track were long in this stock, a change of 8% from the previous quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were increasing their holdings considerably.

When looking at the hedgies we track, Renaissance Technologies, managed by Jim Simons, holds the biggest position in InterContinental Hotels Group PLC (ADR) (NYSE:IHG). Renaissance Technologies has a $16 million position in the stock, comprising 0% of its 13F portfolio. Sitting at the No. 2 spot is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $11 million position; 0% of its 13F portfolio is allocated to the company. Some other peers that are bullish include Claes Fornell’s CSat Investment Advisory, D. E. Shaw’s D E Shaw and Israel Englander’s Millennium Management.

As industrywide interest jumped, specific money managers have jumped into InterContinental Hotels Group PLC (ADR) (NYSE:IHG) headfirst. Renaissance Technologies, managed by Jim Simons, established the most outsized position in InterContinental Hotels Group PLC (ADR) (NYSE:IHG). Renaissance Technologies had 16 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $11 million position during the quarter. The following funds were also among the new IHG investors: Claes Fornell’s CSat Investment Advisory, D. E. Shaw’s D E Shaw, and Israel Englander’s Millennium Management.

What do corporate executives and insiders think about InterContinental Hotels Group PLC (ADR) (NYSE:IHG)?

Insider purchases made by high-level executives is most useful when the company in question has experienced transactions within the past half-year. Over the last half-year time frame, 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 go over hedge fund and insider activity in other stocks similar to InterContinental Hotels Group PLC (ADR) (NYSE:IHG). These stocks are Expedia Inc (NASDAQ:EXPE), Wyndham Worldwide Corporation (NYSE:WYN), Hyatt Hotels Corporation (NYSE:H), Starwood Hotels & Resorts Worldwide, Inc (NYSE:HOT), and Marriott International Inc (NYSE:MAR). This group of stocks are the members of the lodging industry and their market caps resemble IHG’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Expedia Inc (NASDAQ:EXPE) 33 1 4
Wyndham Worldwide Corporation (NYSE:WYN) 30 0 9
Hyatt Hotels Corporation (NYSE:H) 14 0 2
Starwood Hotels & Resorts Worldwide, Inc (NYSE:HOT) 31 0 12
Marriott International Inc (NYSE:MAR) 19 0 12

With the returns exhibited by Insider Monkey’s research, everyday investors should always keep an eye on hedge fund and insider trading activity, and InterContinental Hotels Group PLC (ADR) (NYSE:IHG) shareholders fit into this picture quite nicely.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.

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