Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before last year’s Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first half of 2019, most investors recovered all of their Q4 losses as sentiment shifted and optimism dominated the US China trade negotiations. Nevertheless, many of the stocks that delivered strong returns in the first half still sport strong fundamentals and their gains were more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Identiv, Inc. (NASDAQ:INVE) changed recently.
Identiv, Inc. (NASDAQ:INVE) investors should be aware of an increase in hedge fund interest recently. Our calculations also showed that INVE isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Chuck Royce of Royce & Associates
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to go over the recent hedge fund action regarding Identiv, Inc. (NASDAQ:INVE).
What have hedge funds been doing with Identiv, Inc. (NASDAQ:INVE)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards INVE over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Among these funds, Royce & Associates held the most valuable stake in Identiv, Inc. (NASDAQ:INVE), which was worth $4 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $2.3 million worth of shares. Millennium Management 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 Royce & Associates allocated the biggest weight to Identiv, Inc. (NASDAQ:INVE), around 0.04% of its portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.002 percent of its 13F equity portfolio to INVE.
Now, specific money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the most outsized position in Identiv, Inc. (NASDAQ:INVE). Millennium Management had $0.1 million invested in the company at the end of the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Identiv, Inc. (NASDAQ:INVE) but similarly valued. We will take a look at Coda Octopus Group, Inc. (NASDAQ:CODA), Urban One, Inc. (NASDAQ:UONEK), Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS), and The New Home Company Inc (NYSE:NWHM). All of these stocks’ market caps match INVE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CODA | 4 | 2627 | -1 |
| UONEK | 4 | 10765 | 0 |
| CRVS | 6 | 36290 | -1 |
| NWHM | 8 | 16623 | 2 |
| Average | 5.5 | 16576 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.5 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $6 million in INVE’s case. The New Home Company Inc (NYSE:NWHM) is the most popular stock in this table. On the other hand Coda Octopus Group, Inc. (NASDAQ:CODA) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Identiv, Inc. (NASDAQ:INVE) is even less popular than CODA. Hedge funds dodged a bullet by taking a bearish stance towards INVE. Our calculations showed that the top 20 most popular hedge fund stocks returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately INVE wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); INVE investors were disappointed as the stock returned 0.4% during the fourth quarter (through 11/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
