We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards ING Groep N.V. (NYSE:ING) and determine whether hedge funds skillfully traded this stock.
ING Groep N.V. (NYSE:ING) investors should be aware of a decrease in enthusiasm from smart money lately. ING was in 13 hedge funds’ portfolios at the end of the first quarter of 2020. There were 14 hedge funds in our database with ING holdings at the end of the previous quarter. Our calculations also showed that ING 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.
In the 21st century investor’s toolkit there are tons of formulas shareholders employ to grade publicly traded companies. A duo of the most innovative formulas are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the top fund managers can trounce their index-focused peers by a very impressive amount (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, we take a look at lists like the 18 cities with the best air quality to identify emerging trends that are likely to lead to 1000% gains in the coming years. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to check out the key hedge fund action regarding ING Groep N.V. (NYSE:ING).
How have hedgies been trading ING Groep N.V. (NYSE:ING)?
At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ING over the last 18 quarters. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Fisher’s Fisher Asset Management has the number one position in ING Groep N.V. (NYSE:ING), worth close to $260.6 million, corresponding to 0.3% of its total 13F portfolio. On Fisher Asset Management’s heels is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $22.7 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions consist of William B. Gray’s Orbis Investment Management, Benjamin A. Smith’s Laurion Capital Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Fisher Asset Management allocated the biggest weight to ING Groep N.V. (NYSE:ING), around 0.32% of its 13F portfolio. Galibier Capital Management is also relatively very bullish on the stock, designating 0.22 percent of its 13F equity portfolio to ING.
Seeing as ING Groep N.V. (NYSE:ING) has witnessed bearish sentiment from the smart money, it’s easy to see that there is a sect of funds who sold off their entire stakes heading into Q4. It’s worth mentioning that Richard Mashaal’s Rima Senvest Management dumped the largest stake of all the hedgies tracked by Insider Monkey, totaling close to $1.2 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund dropped about $0.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to ING Groep N.V. (NYSE:ING). We will take a look at Splunk Inc (NASDAQ:SPLK), Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), ANSYS, Inc. (NASDAQ:ANSS), and KKR & Co Inc. (NYSE:KKR). This group of stocks’ market caps are similar to ING’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 43 hedge funds with bullish positions and the average amount invested in these stocks was $1788 million. That figure was $299 million in ING’s case. Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN) is the most popular stock in this table. On the other hand ANSYS, Inc. (NASDAQ:ANSS) is the least popular one with only 31 bullish hedge fund positions. Compared to these stocks ING Groep N.V. (NYSE:ING) is even less popular than ANSS. Hedge funds clearly dropped the ball on ING as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on ING as the stock returned 37.5% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.