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Hedge Funds Parking Their Capital In ICON Public Limited Company (ICLR)

In this article we will take a look at whether hedge funds think ICON Public Limited Company (NASDAQ:ICLR) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

ICON Public Limited Company (NASDAQ:ICLR) was in 21 hedge funds’ portfolios at the end of the first quarter of 2020. ICLR has experienced an increase in enthusiasm from smart money lately. There were 19 hedge funds in our database with ICLR positions at the end of the previous quarter. Our calculations also showed that ICLR 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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.

Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

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. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 review the recent hedge fund action surrounding ICON Public Limited Company (NASDAQ:ICLR).

How are hedge funds trading ICON Public Limited Company (NASDAQ:ICLR)?

Heading into the second quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from one quarter earlier. On the other hand, there were a total of 27 hedge funds with a bullish position in ICLR a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Is ICLR A Good Stock To Buy?

The largest stake in ICON Public Limited Company (NASDAQ:ICLR) was held by Renaissance Technologies, which reported holding $340.2 million worth of stock at the end of September. It was followed by Polar Capital with a $32.3 million position. Other investors bullish on the company included D E Shaw, Citadel Investment Group, and McKinley Capital Management. In terms of the portfolio weights assigned to each position Intrepid Capital Management allocated the biggest weight to ICON Public Limited Company (NASDAQ:ICLR), around 1.45% of its 13F portfolio. McKinley Capital Management is also relatively very bullish on the stock, designating 1.08 percent of its 13F equity portfolio to ICLR.

As one would reasonably expect, specific money managers have jumped into ICON Public Limited Company (NASDAQ:ICLR) headfirst. Intrepid Capital Management, managed by Mark Travis, initiated the most outsized position in ICON Public Limited Company (NASDAQ:ICLR). Intrepid Capital Management had $2.1 million invested in the company at the end of the quarter. Chen Tianqiao’s Shanda Asset Management also made a $2 million investment in the stock during the quarter. The following funds were also among the new ICLR investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, and Hoon Kim’s Quantinno Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as ICON Public Limited Company (NASDAQ:ICLR) but similarly valued. These stocks are Ares Management L.P. (NYSE:ARES), Bio-Techne Corporation (NASDAQ:TECH), Zendesk Inc (NYSE:ZEN), and Annaly Capital Management, Inc. (NYSE:NLY). This group of stocks’ market valuations are closest to ICLR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ARES 16 186111 -2
TECH 26 313491 0
ZEN 55 1262714 -6
NLY 27 224564 6
Average 31 496720 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $497 million. That figure was $478 million in ICLR’s case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand Ares Management L.P. (NYSE:ARES) is the least popular one with only 16 bullish hedge fund positions. ICON Public Limited Company (NASDAQ:ICLR) is not the least popular stock in this group but hedge fund interest is still below average. 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 12.2% in 2020 through June 17th and surpassed the market by 14.8 percentage points. Unfortunately ICLR wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); ICLR investors were disappointed as the stock returned 17.1% during the second 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.