Here is What Hedge Funds Think About IAC/InterActiveCorp (IAC)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of IAC/InterActiveCorp (NASDAQ:IAC) based on that data.

Is IAC/InterActiveCorp (NASDAQ:IAC) a buy, sell, or hold? Hedge funds were taking a bearish view. The number of bullish hedge fund bets dropped by 13 in recent months. IAC/InterActiveCorp (NASDAQ:IAC) was in 50 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 72. Our calculations also showed that IAC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 63 hedge funds in our database with IAC positions at the end of the first quarter.

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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, artificial intelligence is one of the fastest-growing industries right now, so we are checking out stock pitches like this emerging AI stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to take a peek at the new hedge fund action regarding IAC/InterActiveCorp (NASDAQ:IAC).

Do Hedge Funds Think IAC Is A Good Stock To Buy Now?

At Q2’s end, a total of 50 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in IAC over the last 24 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

The largest stake in IAC/InterActiveCorp (NASDAQ:IAC) was held by ShawSpring Partners, which reported holding $292.4 million worth of stock at the end of June. It was followed by Echo Street Capital Management with a $146.3 million position. Other investors bullish on the company included Holocene Advisors, Harspring Capital Management, and Kerrisdale Capital. In terms of the portfolio weights assigned to each position ShawSpring Partners allocated the biggest weight to IAC/InterActiveCorp (NASDAQ:IAC), around 27.78% of its 13F portfolio. Harspring Capital Management is also relatively very bullish on the stock, setting aside 9.35 percent of its 13F equity portfolio to IAC.

Judging by the fact that IAC/InterActiveCorp (NASDAQ:IAC) has witnessed bearish sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few funds that elected to cut their positions entirely heading into Q3. Interestingly, Gabriel Plotkin’s Melvin Capital Management cut the biggest stake of the “upper crust” of funds monitored by Insider Monkey, worth close to $328.8 million in stock, and Alexander Mitchell’s Scopus Asset Management was right behind this move, as the fund dumped about $119 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 13 funds heading into Q3.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as IAC/InterActiveCorp (NASDAQ:IAC) but similarly valued. We will take a look at Tuya Inc. (NYSE:TUYA), RLX Technology Inc. (NYSE:RLX), CureVac N.V. (NASDAQ:CVAC), Whirlpool Corporation (NYSE:WHR), American Airlines Group Inc (NASDAQ:AAL), Centrais Elétricas Brasileiras S.A. – Eletrobrás (NYSE:EBR), and UWM Holdings Corporation (NYSE:UWMC). This group of stocks’ market caps are closest to IAC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.3 hedge funds with bullish positions and the average amount invested in these stocks was $330 million. That figure was $1226 million in IAC’s case. Whirlpool Corporation (NYSE:WHR) is the most popular stock in this table. On the other hand Centrais Elétricas Brasileiras S.A. – Eletrobrás (NYSE:EBR) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks IAC/InterActiveCorp (NASDAQ:IAC) is more popular among hedge funds. Our overall hedge fund sentiment score for IAC is 62.8. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.9% in 2021 through October 1st and still beat the market by 5.6 percentage points. Unfortunately IAC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on IAC were disappointed as the stock returned -12.1% since the end of the second quarter (through 10/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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