The financial regulations require hedge funds and wealthy investors that exceeded 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 March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Ingevity Corporation (NYSE:NGVT) based on those filings.
Is Ingevity Corporation (NYSE:NGVT) a great investment now? Money managers are in an optimistic mood. The number of bullish hedge fund bets went up by 2 in recent months. Our calculations also showed that NGVT 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.
To most traders, hedge funds are assumed to be worthless, outdated investment tools of years past. While there are over 8000 funds with their doors open today, We choose to focus on the crème de la crème of this group, about 850 funds. These money managers have their hands on bulk of the smart money’s total capital, and by keeping track of their best investments, Insider Monkey has determined a number of investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one as well as this tiny lithium play. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s view the fresh hedge fund action encompassing Ingevity Corporation (NYSE:NGVT).
What have hedge funds been doing with Ingevity Corporation (NYSE:NGVT)?
At Q1’s end, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. By comparison, 23 hedge funds held shares or bullish call options in NGVT a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
The largest stake in Ingevity Corporation (NYSE:NGVT) was held by Maple Rock Capital, which reported holding $29.4 million worth of stock at the end of September. It was followed by Broad Bay Capital with a $27.5 million position. Other investors bullish on the company included D E Shaw, Falcon Edge Capital, and Chilton Investment Company. In terms of the portfolio weights assigned to each position Broad Bay Capital allocated the biggest weight to Ingevity Corporation (NYSE:NGVT), around 7.55% of its 13F portfolio. Maple Rock Capital is also relatively very bullish on the stock, dishing out 7.53 percent of its 13F equity portfolio to NGVT.
With a general bullishness amongst the heavyweights, some big names have jumped into Ingevity Corporation (NYSE:NGVT) headfirst. Maple Rock Capital, managed by Len Kipp and Xavier Majic, established the largest position in Ingevity Corporation (NYSE:NGVT). Maple Rock Capital had $29.4 million invested in the company at the end of the quarter. Thomas E. Claugus’s GMT Capital also made a $6.1 million investment in the stock during the quarter. The other funds with brand new NGVT positions are Brandon Haley’s Holocene Advisors, Mark Lee’s Mountaineer Partners Management, and Michael Gelband’s ExodusPoint Capital.
Let’s also examine hedge fund activity in other stocks similar to Ingevity Corporation (NYSE:NGVT). We will take a look at Insperity Inc (NYSE:NSP), Sinclair Broadcast Group, Inc. (NASDAQ:SBGI), Navient Corp (NASDAQ:NAVI), and First Financial Bancorp (NASDAQ:FFBC). This group of stocks’ market valuations are similar to NGVT’s market valuation.
|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 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $123 million. That figure was $167 million in NGVT’s case. Navient Corp (NASDAQ:NAVI) is the most popular stock in this table. On the other hand First Financial Bancorp (NASDAQ:FFBC) is the least popular one with only 8 bullish hedge fund positions. Ingevity Corporation (NYSE:NGVT) is not the most popular stock in this group but hedge fund interest is still above average. 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on NGVT as the stock returned 49.6% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.