Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of IDACORP Inc (NYSE:IDA) based on that data and determine whether they were really smart about the stock.
Is IDACORP Inc (NYSE:IDA) worth your attention right now? The best stock pickers were becoming less confident. The number of long hedge fund bets shrunk by 2 recently. IDACORP Inc (NYSE:IDA) was in 22 hedge funds’ portfolios at the end of June. The all time high for this statistics is 24. Our calculations also showed that IDA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 24 hedge funds in our database with IDA holdings at the end of March.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Now let’s take a glance at the new hedge fund action surrounding IDACORP Inc (NYSE:IDA).
How are hedge funds trading IDACORP Inc (NYSE:IDA)?
At the end of the second quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards IDA over the last 20 quarters. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the most valuable position in IDACORP Inc (NYSE:IDA). Renaissance Technologies has a $80.2 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Citadel Investment Group, managed by Ken Griffin, which holds a $38.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish contain D. E. Shaw’s D E Shaw, Ken Fisher’s Fisher Asset Management and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Weld Capital Management allocated the biggest weight to IDACORP Inc (NYSE:IDA), around 0.77% of its 13F portfolio. Cinctive Capital Management is also relatively very bullish on the stock, designating 0.34 percent of its 13F equity portfolio to IDA.
Due to the fact that IDACORP Inc (NYSE:IDA) has experienced bearish sentiment from the smart money, it’s safe to say that there exists a select few hedge funds that decided to sell off their entire stakes in the second quarter. At the top of the heap, Brandon Haley’s Holocene Advisors said goodbye to the biggest position of all the hedgies tracked by Insider Monkey, totaling close to $2 million in stock. Peter Muller’s fund, PDT Partners, also sold off its stock, about $0.4 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 2 funds in the second quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as IDACORP Inc (NYSE:IDA) but similarly valued. These stocks are Parsley Energy Inc (NYSE:PE), Arrowhead Pharmaceuticals Inc. (NASDAQ:ARWR), The Middleby Corporation (NASDAQ:MIDD), NewMarket Corporation (NYSE:NEU), Silicon Laboratories Inc. (NASDAQ:SLAB), Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI), and Mercury Systems Inc (NASDAQ:MRCY). This group of stocks’ market caps match IDA’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.4 hedge funds with bullish positions and the average amount invested in these stocks was $175 million. That figure was $251 million in IDA’s case. Parsley Energy Inc (NYSE:PE) is the most popular stock in this table. On the other hand Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI) is the least popular one with only 3 bullish hedge fund positions. IDACORP Inc (NYSE:IDA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IDA is 56.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately IDA wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); IDA investors were disappointed as the stock returned -7.9% in the third 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.
Disclosure: None. This article was originally published at Insider Monkey.