Here is What Hedge Funds Think About Infosys Limited (INFY)

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Infosys Limited (NYSE:INFY).

Is Infosys Limited (NYSE:INFY) a healthy stock for your portfolio? The best stock pickers were in a bullish mood. The number of long hedge fund bets advanced by 3 in recent months. Infosys Limited (NYSE:INFY) was in 26 hedge funds’ portfolios at the end of March. The all time high for this statistic is 27. Our calculations also showed that INFY isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 23 hedge funds in our database with INFY holdings at the end of December.

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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Bernard Horn of Polaris Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. Keeping this in mind let’s take a look at the new hedge fund action encompassing Infosys Limited (NYSE:INFY).

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

Heading into the second quarter of 2021, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in INFY over the last 23 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, GQG Partners was the largest shareholder of Infosys Limited (NYSE:INFY), with a stake worth $1017.1 million reported as of the end of March. Trailing GQG Partners was Fisher Asset Management, which amassed a stake valued at $336.4 million. AQR Capital Management, Polaris Capital Management, and Millennium 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 Dalton Investments allocated the biggest weight to Infosys Limited (NYSE:INFY), around 11.15% of its 13F portfolio. Polaris Capital Management is also relatively very bullish on the stock, setting aside 5.21 percent of its 13F equity portfolio to INFY.

As aggregate interest increased, key money managers were breaking ground themselves. GuardCap Asset Management, managed by Guardian Capital, assembled the most valuable position in Infosys Limited (NYSE:INFY). GuardCap Asset Management had $3.1 million invested in the company at the end of the quarter. Patrick Degorce’s Theleme Partners also initiated a $1.6 million position during the quarter. The other funds with brand new INFY positions are Frank Fu’s CaaS Capital, Greg Eisner’s Engineers Gate Manager, and Bruce Kovner’s Caxton Associates LP.

Let’s now take a look at hedge fund activity in other stocks similar to Infosys Limited (NYSE:INFY). These stocks are The TJX Companies, Inc. (NYSE:TJX), Snap Inc. (NYSE:SNAP), Prologis Inc (NYSE:PLD), Truist Financial Corporation (NYSE:TFC), The Bank of Nova Scotia (NYSE:BNS), China Petroleum & Chemical Corp (NYSE:SNP), and FedEx Corporation (NYSE:FDX). This group of stocks’ market values are similar to INFY’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TJX 63 2348057 -5
SNAP 73 4324308 10
PLD 39 771817 3
TFC 36 845826 -4
BNS 19 239536 0
SNP 11 210183 -2
FDX 63 2263772 0
Average 43.4 1571928 0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 43.4 hedge funds with bullish positions and the average amount invested in these stocks was $1572 million. That figure was $2011 million in INFY’s case. Snap Inc. (NYSE:SNAP) is the most popular stock in this table. On the other hand China Petroleum & Chemical Corp (NYSE:SNP) is the least popular one with only 11 bullish hedge fund positions. Infosys Limited (NYSE:INFY) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for INFY is 49. 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 24% in 2021 through July 9th and beat the market by 6.7 percentage points. A small number of hedge funds were also right about betting on INFY, though not to the same extent, as the stock returned 15.2% since the end of Q1 (through July 9th) and outperformed the market.

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