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Did Hedge Funds Make The Right Call On IDEX Corporation (IEX) ?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded IDEX Corporation (NYSE:IEX) and determine whether the smart money was really smart about this stock.

IDEX Corporation (NYSE:IEX) investors should be aware of an increase in activity from the world’s largest hedge funds lately. Our calculations also showed that IEX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To most shareholders, hedge funds are assumed to be unimportant, old investment tools of yesteryear. While there are over 8000 funds in operation at present, Our experts choose to focus on the upper echelon of this club, about 850 funds. It is estimated that this group of investors command the lion’s share of all hedge funds’ total asset base, and by keeping track of their inimitable picks, Insider Monkey has unearthed various investment strategies that have historically outrun Mr. Market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Mario Gabelli of GAMCO Investors

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. Now let’s analyze the fresh hedge fund action encompassing IDEX Corporation (NYSE:IEX).

What does smart money think about IDEX Corporation (NYSE:IEX)?

Heading into the second quarter of 2020, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 43% from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in IEX a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ian Simm’s Impax Asset Management has the number one position in IDEX Corporation (NYSE:IEX), worth close to $261.9 million, amounting to 3.5% of its total 13F portfolio. Coming in second is GAMCO Investors, led by Mario Gabelli, holding a $46.9 million position; 0.6% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions contain Renaissance Technologies, Israel Englander’s Millennium Management and Paul Marshall and Ian Wace’s Marshall Wace LLP. In terms of the portfolio weights assigned to each position Impax Asset Management allocated the biggest weight to IDEX Corporation (NYSE:IEX), around 3.49% of its 13F portfolio. Jade Capital Advisors is also relatively very bullish on the stock, dishing out 2.61 percent of its 13F equity portfolio to IEX.

Now, key hedge funds were breaking ground themselves. Select Equity Group, managed by Robert Joseph Caruso, initiated the most valuable position in IDEX Corporation (NYSE:IEX). Select Equity Group had $21.2 million invested in the company at the end of the quarter. Robert Pohly’s Samlyn Capital also made a $20.3 million investment in the stock during the quarter. The other funds with brand new IEX positions are Greg Poole’s Echo Street Capital Management, Wallace Weitz’s Wallace R. Weitz & Co., and D. E. Shaw’s D E Shaw.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as IDEX Corporation (NYSE:IEX) but similarly valued. These stocks are Roku, Inc. (NASDAQ:ROKU), Bio-Rad Laboratories, Inc. (NYSE:BIO), Equity Lifestyle Properties, Inc. (NYSE:ELS), and DISH Network Corp. (NASDAQ:DISH). All of these stocks’ market caps are closest to IEX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ROKU 35 182267 1
BIO 39 874653 -5
ELS 31 452058 8
DISH 44 862996 3
Average 37.25 592994 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 37.25 hedge funds with bullish positions and the average amount invested in these stocks was $593 million. That figure was $535 million in IEX’s case. DISH Network Corp. (NASDAQ:DISH) is the most popular stock in this table. On the other hand Equity Lifestyle Properties, Inc. (NYSE:ELS) is the least popular one with only 31 bullish hedge fund positions. IDEX Corporation (NYSE:IEX) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and surpassed the market by 15.5 percentage points. Unfortunately IEX wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); IEX investors were disappointed as the stock returned 14.8% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.