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Hedge Funds Dipping Their Toes Into Integra Lifesciences Holdings Corp (IART)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Integra Lifesciences Holdings Corp (NASDAQ:IART) based on that data and determine whether they were really smart about the stock.

Integra Lifesciences Holdings Corp (NASDAQ:IART) was in 23 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 23. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. IART has experienced an increase in activity from the world’s largest hedge funds lately. There were 22 hedge funds in our database with IART positions at the end of the first quarter. Our calculations also showed that IART isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 56 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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Alex Litowitz Magnetar Capital

Alec Litowitz of Magnetar Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Now we’re going to take a peek at the fresh hedge fund action regarding Integra Lifesciences Holdings Corp (NASDAQ:IART).

What have hedge funds been doing with Integra Lifesciences Holdings Corp (NASDAQ:IART)?

At Q2’s end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in IART over the last 20 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Integra Lifesciences Holdings Corp (NASDAQ:IART) was held by Fisher Asset Management, which reported holding $31.9 million worth of stock at the end of September. It was followed by D E Shaw with a $18.1 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and AQR Capital Management. In terms of the portfolio weights assigned to each position Neo Ivy Capital allocated the biggest weight to Integra Lifesciences Holdings Corp (NASDAQ:IART), around 0.31% of its 13F portfolio. TwinBeech Capital is also relatively very bullish on the stock, dishing out 0.13 percent of its 13F equity portfolio to IART.

As aggregate interest increased, key money managers have jumped into Integra Lifesciences Holdings Corp (NASDAQ:IART) headfirst. AQR Capital Management, managed by Cliff Asness, created the largest position in Integra Lifesciences Holdings Corp (NASDAQ:IART). AQR Capital Management had $6.6 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser’s Magnetar Capital also initiated a $0.5 million position during the quarter. The other funds with brand new IART positions are Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management, Qing Li’s Sciencast Management, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Integra Lifesciences Holdings Corp (NASDAQ:IART) but similarly valued. These stocks are Darling Ingredients Inc. (NYSE:DAR), BOK Financial Corporation (NASDAQ:BOKF), Wyndham Hotels & Resorts, Inc. (NYSE:WH), Huntsman Corporation (NYSE:HUN), Qurate Retail, Inc. (NASDAQ:QRTEA), BridgeBio Pharma, Inc. (NASDAQ:BBIO), and Healthcare Realty Trust Inc (NYSE:HR). All of these stocks’ market caps are closest to IART’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DAR 25 403765 0
BOKF 17 203603 -5
WH 36 760057 5
HUN 25 354992 4
QRTEA 43 743396 11
BBIO 14 1341110 2
HR 22 155771 11
Average 26 566099 4

View table here if you experience formatting issues.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $566 million. That figure was $101 million in IART’s case. Qurate Retail, Inc. (NASDAQ:QRTEA) is the most popular stock in this table. On the other hand BridgeBio Pharma, Inc. (NASDAQ:BBIO) is the least popular one with only 14 bullish hedge fund positions. Integra Lifesciences Holdings Corp (NASDAQ:IART) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IART is 51.5. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately IART wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); IART investors were disappointed as the stock returned 0.5% in 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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