Hedge Funds Sticking With International Flavors & Fragrances Inc (IFF)

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 International Flavors & Fragrances Inc (NYSE:IFF).

Hedge fund interest in International Flavors & Fragrances Inc (NYSE:IFF) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Broadridge Financial Solutions, Inc. (NYSE:BR), Teledyne Technologies Incorporated (NYSE:TDY), and Nucor Corporation (NYSE:NUE) to gather more data points. Our calculations also showed that IFF 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 the average investor there are several signals investors employ to assess publicly traded companies. A pair of the best signals are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the elite money managers can trounce the S&P 500 by a solid margin (see the details here).

Tom Gayner

Tom Gayner of Markel Gayner Asset Management

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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. With all of this in mind we’re going to take a peek at the recent hedge fund action regarding International Flavors & Fragrances Inc (NYSE:IFF).

Hedge fund activity in International Flavors & Fragrances Inc (NYSE:IFF)

Heading into the second quarter of 2020, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards IFF over the last 18 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).

Among these funds, GAMCO Investors held the most valuable stake in International Flavors & Fragrances Inc (NYSE:IFF), which was worth $48.5 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $26.5 million worth of shares. Adage Capital Management, Marshall Wace LLP, and Markel Gayner Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Sandbar Asset Management allocated the biggest weight to International Flavors & Fragrances Inc (NYSE:IFF), around 5.7% of its 13F portfolio. Beech Hill Partners is also relatively very bullish on the stock, setting aside 1.95 percent of its 13F equity portfolio to IFF.

Judging by the fact that International Flavors & Fragrances Inc (NYSE:IFF) has faced a decline in interest from the smart money, it’s easy to see that there is a sect of hedge funds that decided to sell off their entire stakes by the end of the first quarter. At the top of the heap, Greg Poole’s Echo Street Capital Management sold off the largest stake of all the hedgies followed by Insider Monkey, comprising an estimated $27 million in stock, and Daniel Lascano’s Lomas Capital Management was right behind this move, as the fund sold off about $8.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks similar to International Flavors & Fragrances Inc (NYSE:IFF). We will take a look at Broadridge Financial Solutions, Inc. (NYSE:BR), Teledyne Technologies Incorporated (NYSE:TDY), Nucor Corporation (NYSE:NUE), and Baker Hughes Company (NYSE:BKR). This group of stocks’ market valuations are closest to IFF’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BR 29 307241 -6
TDY 21 384671 -3
NUE 26 95527 0
BKR 30 281145 -7
Average 26.5 267146 -4

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.5 hedge funds with bullish positions and the average amount invested in these stocks was $267 million. That figure was $163 million in IFF’s case. Baker Hughes Company (NYSE:BKR) is the most popular stock in this table. On the other hand Teledyne Technologies Incorporated (NYSE:TDY) is the least popular one with only 21 bullish hedge fund positions. International Flavors & Fragrances Inc (NYSE:IFF) 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 IFF as the stock returned 30.5% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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