A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 28, so let’s proceed with the discussion of the hedge fund sentiment on International Money Express, Inc. (NASDAQ:IMXI).
Is International Money Express, Inc. (NASDAQ:IMXI) a healthy stock for your portfolio? Investors who are in the know are getting more optimistic. The number of long hedge fund positions advanced by 1 in recent months. Our calculations also showed that IMXI isn’t among the 30 most popular stocks among hedge funds (see the video below). IMXI was in 12 hedge funds’ portfolios at the end of June. There were 11 hedge funds in our database with IMXI holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, 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. Let’s take a look at the key hedge fund action regarding International Money Express, Inc. (NASDAQ:IMXI).
How have hedgies been trading International Money Express, Inc. (NASDAQ:IMXI)?
At the end of the second quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the first quarter of 2019. On the other hand, there were a total of 0 hedge funds with a bullish position in IMXI a year ago. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, Nantahala Capital Management was the largest shareholder of International Money Express, Inc. (NASDAQ:IMXI), with a stake worth $41.4 million reported as of the end of March. Trailing Nantahala Capital Management was Headlands Capital, which amassed a stake valued at $21.9 million. Steamboat Capital Partners, Granite Point Capital, and Becker Drapkin Management were also very fond of the stock, giving the stock large weights in their portfolios.
Now, key money managers were leading the bulls’ herd. Steamboat Capital Partners, managed by Parsa Kiai, initiated the most valuable position in International Money Express, Inc. (NASDAQ:IMXI). Steamboat Capital Partners had $16.4 million invested in the company at the end of the quarter. Matthew Drapkin and Steven R. Becker’s Becker Drapkin Management also made a $3.4 million investment in the stock during the quarter. The only other fund with a new position in the stock is George McCabe’s Portolan Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to International Money Express, Inc. (NASDAQ:IMXI). We will take a look at LeMaitre Vascular Inc (NASDAQ:LMAT), Heidrick & Struggles International, Inc. (NASDAQ:HSII), SurModics, Inc. (NASDAQ:SRDX), and Ichor Holdings, Ltd. (NASDAQ:ICHR). This group of stocks’ market valuations match IMXI’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 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $98 million in IMXI’s case. SurModics, Inc. (NASDAQ:SRDX) is the most popular stock in this table. On the other hand Ichor Holdings, Ltd. (NASDAQ:ICHR) is the least popular one with only 8 bullish hedge fund positions. International Money Express, Inc. (NASDAQ:IMXI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately IMXI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on IMXI were disappointed as the stock returned -2.6% 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 this year.
Disclosure: None. This article was originally published at Insider Monkey.