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 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded Intercontinental Exchange Inc (NYSE:ICE) and determine whether the smart money was really smart about this stock.
Intercontinental Exchange Inc (NYSE:ICE) shareholders have witnessed a decrease in hedge fund interest in recent months. Intercontinental Exchange Inc (NYSE:ICE) was in 60 hedge funds’ portfolios at the end of June. The all time high for this statistics is 61. Our calculations also showed that ICE 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Harold Levy of Iridian Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Currently, investors are pessimistic about commercial real estate investments. So, we are checking out this contrarian play to diversify our market exposure. We go through lists like the 10 most profitable companies in America 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind we’re going to analyze the key hedge fund action regarding Intercontinental Exchange Inc (NYSE:ICE).
How are hedge funds trading Intercontinental Exchange Inc (NYSE:ICE)?
At the end of June, a total of 60 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -2% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ICE 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.
More specifically, D E Shaw was the largest shareholder of Intercontinental Exchange Inc (NYSE:ICE), with a stake worth $481.9 million reported as of the end of September. Trailing D E Shaw was Cantillon Capital Management, which amassed a stake valued at $410.5 million. Alkeon Capital Management, Iridian Asset Management, and GLG Partners 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 Truvvo Partners allocated the biggest weight to Intercontinental Exchange Inc (NYSE:ICE), around 26.64% of its 13F portfolio. Crescent Park Management is also relatively very bullish on the stock, setting aside 6.3 percent of its 13F equity portfolio to ICE.
Due to the fact that Intercontinental Exchange Inc (NYSE:ICE) has experienced falling interest from hedge fund managers, it’s easy to see that there were a few money managers that slashed their positions entirely heading into Q3. It’s worth mentioning that Alex Duran and Scott Hendrickson’s Permian Investment Partners dumped the largest stake of the “upper crust” of funds monitored by Insider Monkey, totaling about $90.8 million in stock. Ricky Sandler’s fund, Eminence Capital, also dumped its stock, about $81.1 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 1 funds heading into Q3.
Let’s now review hedge fund activity in other stocks similar to Intercontinental Exchange Inc (NYSE:ICE). These stocks are The Bank of Nova Scotia (NYSE:BNS), Newmont Corporation (NYSE:NEM), Deere & Company (NYSE:DE), Mercadolibre Inc (NASDAQ:MELI), Kimberly Clark Corporation (NYSE:KMB), ABB Ltd (NYSE:ABB), and Spotify Technology S.A. (NYSE:SPOT). This group of stocks’ market valuations match ICE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BNS | 13 | 252173 | 1 |
| NEM | 55 | 2418239 | 12 |
| DE | 32 | 839882 | -12 |
| MELI | 60 | 4427510 | 0 |
| KMB | 37 | 1173794 | -9 |
| ABB | 10 | 346451 | 0 |
| SPOT | 36 | 1882209 | -4 |
| Average | 34.7 | 1620037 | -1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.7 hedge funds with bullish positions and the average amount invested in these stocks was $1620 million. That figure was $2755 million in ICE’s case. Mercadolibre Inc (NASDAQ:MELI) is the most popular stock in this table. On the other hand ABB Ltd (NYSE:ABB) is the least popular one with only 10 bullish hedge fund positions. Intercontinental Exchange Inc (NYSE:ICE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ICE is 83.5. 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. 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 28.2% in 2020 through August 24th but still beat the market by 20.6 percentage points. Hedge funds were also right about betting on ICE as the stock returned 15.5% since Q2 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.
