The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Ingredion Incorporated (NYSE:INGR) based on those filings.
Ingredion Incorporated (NYSE:INGR) investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. Ingredion Incorporated (NYSE:INGR) was in 21 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 29. Our calculations also showed that INGR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 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 79 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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. With all of this in mind let’s take a glance at the fresh hedge fund action surrounding Ingredion Incorporated (NYSE:INGR).
Do Hedge Funds Think INGR Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from the first quarter of 2020. On the other hand, there were a total of 22 hedge funds with a bullish position in INGR a year ago. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, Yacktman Asset Management was the largest shareholder of Ingredion Incorporated (NYSE:INGR), with a stake worth $238 million reported as of the end of June. Trailing Yacktman Asset Management was Polaris Capital Management, which amassed a stake valued at $48.4 million. AQR Capital Management, Millennium Management, and GLG Partners were 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 Yacktman Asset Management allocated the biggest weight to Ingredion Incorporated (NYSE:INGR), around 2.31% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, earmarking 1.56 percent of its 13F equity portfolio to INGR.
Due to the fact that Ingredion Incorporated (NYSE:INGR) has faced a decline in interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of hedge funds who sold off their positions entirely heading into Q3. Interestingly, Ray Dalio’s Bridgewater Associates dropped the largest position of the “upper crust” of funds watched by Insider Monkey, valued at close to $8.1 million in stock. Jinghua Yan’s fund, TwinBeech Capital, also dumped its stock, about $1.3 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 4 funds heading into Q3.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Ingredion Incorporated (NYSE:INGR) but similarly valued. We will take a look at CDK Global Inc (NASDAQ:CDK), Popular Inc (NASDAQ:BPOP), Primerica, Inc. (NYSE:PRI), BOK Financial Corporation (NASDAQ:BOKF), Hayward Holdings, Inc. (NYSE:HAYW), Eagle Materials, Inc. (NYSE:EXP), and CACI International Inc (NYSE:CACI). This group of stocks’ market caps are similar to INGR’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $422 million. That figure was $384 million in INGR’s case. Eagle Materials, Inc. (NYSE:EXP) is the most popular stock in this table. On the other hand BOK Financial Corporation (NASDAQ:BOKF) is the least popular one with only 13 bullish hedge fund positions. Ingredion Incorporated (NYSE:INGR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for INGR is 40.1. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on INGR as the stock returned 8% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.