Hedge Funds Cashing Out Of IAC/InterActiveCorp (IAC)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of IAC/InterActiveCorp (NASDAQ:IAC).

IAC/InterActiveCorp (NASDAQ:IAC) was in 57 hedge funds’ portfolios at the end of March. IAC has experienced a decrease in hedge fund sentiment in recent months. There were 71 hedge funds in our database with IAC holdings at the end of the previous quarter. Our calculations also showed that IAC 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 44 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.

Christian Leone of Luxor Capital Group

At Insider Monkey we leave no stone unturned when looking for the next great investment idea.  For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this analyst’s “corona catalyst plays“. We interview hedge fund managers and ask them about best ideas. You can watch our latest hedge fund manager interview here and find out the name of the large-cap healthcare stock that Sio Capital’s Michael Castor expects to double. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the new hedge fund action regarding IAC/InterActiveCorp (NASDAQ:IAC).

What does smart money think about IAC/InterActiveCorp (NASDAQ:IAC)?

At the end of the first quarter, a total of 57 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from one quarter earlier. On the other hand, there were a total of 51 hedge funds with a bullish position in IAC a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Aristeia Capital, managed by Robert Henry Lynch, holds the most valuable position in IAC/InterActiveCorp (NASDAQ:IAC). Aristeia Capital has a $371.1 million position in the stock, comprising 31.3% of its 13F portfolio. Coming in second is Cadian Capital, managed by Eric Bannasch, which holds a $361.4 million position; 17.8% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish comprise Farallon Capital, Ken Griffin’s Citadel Investment Group and Christian Leone’s Luxor Capital Group. In terms of the portfolio weights assigned to each position AREX Capital Management allocated the biggest weight to IAC/InterActiveCorp (NASDAQ:IAC), around 49.65% of its 13F portfolio. Aristeia Capital is also relatively very bullish on the stock, setting aside 31.33 percent of its 13F equity portfolio to IAC.

Because IAC/InterActiveCorp (NASDAQ:IAC) has faced falling interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of funds that elected to cut their entire stakes heading into Q4. At the top of the heap, Robert Pitts’s Steadfast Capital Management sold off the largest stake of the 750 funds watched by Insider Monkey, comprising close to $64.7 million in stock, and Robert Pohly’s Samlyn Capital was right behind this move, as the fund said goodbye to about $62.7 million worth. These transactions are interesting, as total hedge fund interest fell by 14 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks similar to IAC/InterActiveCorp (NASDAQ:IAC). We will take a look at Skyworks Solutions Inc (NASDAQ:SWKS), BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), Marvell Technology Group Ltd. (NASDAQ:MRVL), and Okta, Inc. (NASDAQ:OKTA). This group of stocks’ market caps are closest to IAC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SWKS 29 768807 -14
BMRN 54 1567492 5
MRVL 29 498283 0
OKTA 48 1086612 9
Average 40 980299 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 40 hedge funds with bullish positions and the average amount invested in these stocks was $980 million. That figure was $2693 million in IAC’s case. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is the most popular stock in this table. On the other hand Skyworks Solutions Inc (NASDAQ:SWKS) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks IAC/InterActiveCorp (NASDAQ:IAC) is more popular among hedge funds. 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 returned 7.9% in 2020 through May 22nd but still managed to beat the market by 15.6 percentage points. Hedge funds were also right about betting on IAC as the stock returned 45.5% so far in Q2 (through May 22nd) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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