The financial regulations require hedge funds and wealthy investors that crossed the $100 million equity 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 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded IDEX Corporation (NYSE:IEX) based on those filings.
IDEX Corporation (NYSE:IEX) investors should be aware of a decrease in hedge fund sentiment of late. IEX was in 15 hedge funds’ portfolios at the end of June. There were 16 hedge funds in our database with IEX positions at the end of the previous quarter. Our calculations also showed that IEX isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the recent hedge fund action surrounding IDEX Corporation (NYSE:IEX).
What does smart money think about IDEX Corporation (NYSE:IEX)?
Heading into the third quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in IEX a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ian Simm’s Impax Asset Management has the number one position in IDEX Corporation (NYSE:IEX), worth close to $234.2 million, amounting to 3% of its total 13F portfolio. The second most bullish fund manager is GAMCO Investors, managed by Mario Gabelli, which holds a $71.7 million position; 0.5% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions consist of Cliff Asness’s AQR Capital Management, Renaissance Technologies and Israel Englander’s Millennium Management.
Judging by the fact that IDEX Corporation (NYSE:IEX) has witnessed bearish sentiment from the smart money, it’s easy to see that there lies a certain “tier” of fund managers that elected to cut their full holdings heading into Q3. Intriguingly, Sara Nainzadeh’s Centenus Global Management sold off the biggest investment of the 750 funds followed by Insider Monkey, worth an estimated $1.2 million in stock. Ian Cumming and Joseph Steinberg’s fund, Leucadia National, also said goodbye to its stock, about $1 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 1 funds heading into Q3.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as IDEX Corporation (NYSE:IEX) but similarly valued. We will take a look at Yandex NV (NASDAQ:YNDX), Conagra Brands, Inc. (NYSE:CAG), PagSeguro Digital Ltd. (NYSE:PAGS), and Hologic, Inc. (NASDAQ:HOLX). This group of stocks’ market caps resemble IEX’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 hedge funds with bullish positions and the average amount invested in these stocks was $898 million. That figure was $375 million in IEX’s case. Hologic, Inc. (NASDAQ:HOLX) is the most popular stock in this table. On the other hand Conagra Brands, Inc. (NYSE:CAG) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks IDEX Corporation (NYSE:IEX) is even less popular than CAG. Hedge funds dodged a bullet by taking a bearish stance towards IEX. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately IEX wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); IEX investors were disappointed as the stock returned -4.5% during the third 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.