Hedge Funds Are Selling IBEX Limited (IBEX)

In this article we will take a look at whether hedge funds think IBEX Limited (NASDAQ:IBEX) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is IBEX Limited (NASDAQ:IBEX) a superb investment right now? Money managers were in a pessimistic mood. The number of bullish hedge fund positions were cut by 1 recently. IBEX Limited (NASDAQ:IBEX) was in 3 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 5. Our calculations also showed that IBEX isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 4 hedge funds in our database with IBEX holdings at the end of December.

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 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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 we’re going to review the key hedge fund action encompassing IBEX Limited (NASDAQ:IBEX).

Do Hedge Funds Think IBEX Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards IBEX over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Holocene Advisors was the largest shareholder of IBEX Limited (NASDAQ:IBEX), with a stake worth $11 million reported as of the end of March. Trailing Holocene Advisors was Schonfeld Strategic Advisors, which amassed a stake valued at $8.8 million. Royce & Associates was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Schonfeld Strategic Advisors allocated the biggest weight to IBEX Limited (NASDAQ:IBEX), around 0.11% of its 13F portfolio. Holocene Advisors is also relatively very bullish on the stock, setting aside 0.07 percent of its 13F equity portfolio to IBEX.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified IBEX as a viable investment and initiated a position in the stock.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as IBEX Limited (NASDAQ:IBEX) but similarly valued. We will take a look at Autolus Therapeutics plc (NASDAQ:AUTL), Kirkland’s, Inc. (NASDAQ:KIRK), Eros STX Global Corporation (NYSE:ESGC), Athenex, Inc. (NASDAQ:ATNX), HOOKIPA Pharma Inc. (NASDAQ:HOOK), Emerald Holding, Inc. (NYSE:EEX), and Sunworks, Inc. (NASDAQ:SUNW). All of these stocks’ market caps match IBEX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.4 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $23 million in IBEX’s case. Kirkland’s, Inc. (NASDAQ:KIRK) is the most popular stock in this table. On the other hand Emerald Holding, Inc. (NYSE:EEX) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks IBEX Limited (NASDAQ:IBEX) is even less popular than EEX. Our overall hedge fund sentiment score for IBEX is 22. 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. Hedge funds dodged a bullet by taking a bearish stance towards IBEX. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th but managed to beat the market again by 3.3 percentage points. Unfortunately IBEX wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); IBEX investors were disappointed as the stock returned -7.7% since the end of the first quarter (through 6/11) 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 since 2019.

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

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