Hedge Funds Are Selling Itron, Inc. (ITRI)

In this article you are going to find out whether hedge funds think Itron, Inc. (NASDAQ:ITRI) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Itron, Inc. (NASDAQ:ITRI) was in 19 hedge funds’ portfolios at the end of March. ITRI has experienced a decrease in hedge fund sentiment in recent months. There were 21 hedge funds in our database with ITRI holdings at the end of the previous quarter. Our calculations also showed that ITRI 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Jeremy Mindich - Scopia Capital

Jeremy Mindich of Scopia Capital

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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. Keeping this in mind we’re going to take a peek at the fresh hedge fund action regarding Itron, Inc. (NASDAQ:ITRI).

What have hedge funds been doing with Itron, Inc. (NASDAQ:ITRI)?

Heading into the second quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards ITRI over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Itron, Inc. (NASDAQ:ITRI) was held by Impax Asset Management, which reported holding $123 million worth of stock at the end of September. It was followed by Scopia Capital with a $56.2 million position. Other investors bullish on the company included Cardinal Capital, Arrowstreet Capital, and Driehaus Capital. In terms of the portfolio weights assigned to each position Scopia Capital allocated the biggest weight to Itron, Inc. (NASDAQ:ITRI), around 5.14% of its 13F portfolio. Cardinal Capital is also relatively very bullish on the stock, dishing out 1.7 percent of its 13F equity portfolio to ITRI.

Judging by the fact that Itron, Inc. (NASDAQ:ITRI) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few funds that elected to cut their full holdings in the first quarter. It’s worth mentioning that Josh Goldberg’s G2 Investment Partners Management dropped the biggest stake of all the hedgies watched by Insider Monkey, worth about $2.1 million in stock. Bernard Lambilliotte’s fund, Ecofin Ltd, also dropped its stock, about $1.8 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 2 funds in the first quarter.

Let’s also examine hedge fund activity in other stocks similar to Itron, Inc. (NASDAQ:ITRI). These stocks are Quaker Chemical Corp (NYSE:KWR), Vivint Smart Home, Inc. (NYSE:VVNT), ViaSat, Inc. (NASDAQ:VSAT), and Old National Bancorp (NASDAQ:ONB). This group of stocks’ market values are similar to ITRI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KWR 8 120286 -1
VVNT 9 6514 -6
VSAT 21 947696 -5
ONB 15 20462 1
Average 13.25 273740 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $274 million. That figure was $247 million in ITRI’s case. ViaSat, Inc. (NASDAQ:VSAT) is the most popular stock in this table. On the other hand Quaker Chemical Corp (NYSE:KWR) is the least popular one with only 8 bullish hedge fund positions. Itron, Inc. (NASDAQ:ITRI) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on ITRI, though not to the same extent, as the stock returned 21.5% during the first two months and twenty two days of the second quarter and outperformed the market as well.

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