While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding ICICI Bank Limited (NYSE:IBN).
ICICI Bank Limited (NYSE:IBN) was in 31 hedge funds’ portfolios at the end of March. The all time high for this statistic is 34. IBN shareholders have witnessed an increase in support from the world’s most elite money managers in recent months. There were 29 hedge funds in our database with IBN positions at the end of the fourth quarter. Our calculations also showed that IBN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s take a look at the recent hedge fund action surrounding ICICI Bank Limited (NYSE:IBN).
Do Hedge Funds Think IBN Is A Good Stock To Buy Now?
At first quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the previous quarter. The graph below displays the number of hedge funds with bullish position in IBN over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Lone Pine Capital, holds the biggest position in ICICI Bank Limited (NYSE:IBN). Lone Pine Capital has a $691.8 million position in the stock, comprising 2.5% of its 13F portfolio. The second most bullish fund manager is GQG Partners, led by Rajiv Jain, holding a $334.7 million position; 1.2% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism consist of Tom Purcell and Marco Tablada’s Alua Capital Management, Robert Pohly’s Samlyn Capital and Richard Driehaus’s Driehaus Capital. In terms of the portfolio weights assigned to each position Dalton Investments allocated the biggest weight to ICICI Bank Limited (NYSE:IBN), around 19.06% of its 13F portfolio. Alua Capital Management is also relatively very bullish on the stock, designating 11.12 percent of its 13F equity portfolio to IBN.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Lone Pine Capital, assembled the biggest position in ICICI Bank Limited (NYSE:IBN). Lone Pine Capital had $691.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $31 million investment in the stock during the quarter. The following funds were also among the new IBN investors: Renaissance Technologies, Steve Cohen’s Point72 Asset Management, and Simon Sadler’s Segantii Capital.
Let’s now take a look at hedge fund activity in other stocks similar to ICICI Bank Limited (NYSE:IBN). We will take a look at UBS Group AG (NYSE:UBS), Eaton Corporation plc (NYSE:ETN), Boston Scientific Corporation (NYSE:BSX), Waste Management, Inc. (NYSE:WM), Emerson Electric Co. (NYSE:EMR), Humana Inc (NYSE:HUM), and Northrop Grumman Corporation (NYSE:NOC). This group of stocks’ market valuations match IBN’s market valuation.
|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 39.9 hedge funds with bullish positions and the average amount invested in these stocks was $1828 million. That figure was $1903 million in IBN’s case. Humana Inc (NYSE:HUM) is the most popular stock in this table. On the other hand UBS Group AG (NYSE:UBS) is the least popular one with only 16 bullish hedge fund positions. ICICI Bank Limited (NYSE:IBN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IBN is 54.6. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and surpassed the market again by 6 percentage points. Unfortunately IBN wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); IBN investors were disappointed as the stock returned 7.8% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
Follow I C I C I Bank Ltd (NYSE:IBN)
Follow I C I C I Bank Ltd (NYSE:IBN)
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Disclosure: None. This article was originally published at Insider Monkey.