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. In this article we look at what those investors think of International Paper Company (NYSE:IP).
Is International Paper Company (NYSE:IP) undervalued? Prominent investors are buying. The number of long hedge fund positions improved by 4 recently. Our calculations also showed that IP 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 financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to analyze the fresh hedge fund action surrounding International Paper Company (NYSE:IP).
What have hedge funds been doing with International Paper Company (NYSE:IP)?
At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from one quarter earlier. On the other hand, there were a total of 29 hedge funds with a bullish position in IP a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the most valuable position in International Paper Company (NYSE:IP). AQR Capital Management has a $88 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Millennium Management, led by Israel Englander, holding a $33.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism comprise John Murphy’s Levin Easterly Partners, Dmitry Balyasny’s Balyasny Asset Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Levin Easterly Partners allocated the biggest weight to International Paper Company (NYSE:IP), around 1.2% of its 13F portfolio. Game Creek Capital is also relatively very bullish on the stock, earmarking 0.61 percent of its 13F equity portfolio to IP.
As aggregate interest increased, key money managers were leading the bulls’ herd. Levin Easterly Partners, managed by John Murphy, established the biggest position in International Paper Company (NYSE:IP). Levin Easterly Partners had $27.1 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $15.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Renaissance Technologies, Benjamin A. Smith’s Laurion Capital Management, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as International Paper Company (NYSE:IP) but similarly valued. We will take a look at Atmos Energy Corporation (NYSE:ATO), Dover Corporation (NYSE:DOV), Healthpeak Properties, Inc. (NYSE:PEAK), and Restaurant Brands International Inc (NYSE:QSR). All of these stocks’ market caps resemble IP’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 29.75 hedge funds with bullish positions and the average amount invested in these stocks was $849 million. That figure was $242 million in IP’s case. Restaurant Brands International Inc (NYSE:QSR) is the most popular stock in this table. On the other hand Atmos Energy Corporation (NYSE:ATO) is the least popular one with only 21 bullish hedge fund positions. International Paper Company (NYSE:IP) 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 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately IP wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); IP investors were disappointed as the stock returned 11.1% 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.
Disclosure: None. This article was originally published at Insider Monkey.