In this article you are going to find out whether hedge funds think Ingredion Incorporated (NYSE:INGR) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Ingredion Incorporated (NYSE:INGR) going to take off soon? Investors who are in the know are becoming less hopeful. The number of long hedge fund positions were trimmed by 5 in recent months. Our calculations also showed that INGR 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.
If you’d ask most stock holders, hedge funds are seen as worthless, outdated financial tools of yesteryear. While there are greater than 8000 funds in operation at the moment, We hone in on the masters of this club, about 850 funds. It is estimated that this group of investors handle bulk of the smart money’s total capital, and by following their highest performing investments, Insider Monkey has figured out several investment strategies that have historically outpaced Mr. Market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 take a peek at the key hedge fund action encompassing Ingredion Incorporated (NYSE:INGR).
How are hedge funds trading Ingredion Incorporated (NYSE:INGR)?
Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -22% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in INGR over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Cliff Asness’s AQR Capital Management has the biggest position in Ingredion Incorporated (NYSE:INGR), worth close to $111.1 million, amounting to 0.2% of its total 13F portfolio. The second most bullish fund manager is D E Shaw, led by D. E. Shaw, holding a $17.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers with similar optimism contain Renaissance Technologies, Ken Griffin’s Citadel Investment Group and David Harding’s Winton Capital Management. In terms of the portfolio weights assigned to each position Fondren Management allocated the biggest weight to Ingredion Incorporated (NYSE:INGR), around 2.49% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, setting aside 0.27 percent of its 13F equity portfolio to INGR.
Due to the fact that Ingredion Incorporated (NYSE:INGR) has faced falling interest from the entirety of the hedge funds we track, we can see that there were a few funds that slashed their positions entirely last quarter. Intriguingly, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the biggest position of the 750 funds monitored by Insider Monkey, comprising an estimated $4.8 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund said goodbye to about $1.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 5 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Ingredion Incorporated (NYSE:INGR). These stocks are Aramark (NYSE:ARMK), Companhia de Saneamento Basico (NYSE:SBS), BorgWarner Inc. (NYSE:BWA), and Canopy Growth Corporation (NYSE:CGC). All of these stocks’ market caps resemble INGR’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $332 million. That figure was $177 million in INGR’s case. BorgWarner Inc. (NYSE:BWA) is the most popular stock in this table. On the other hand Companhia de Saneamento Basico (NYSE:SBS) is the least popular one with only 8 bullish hedge fund positions. Ingredion Incorporated (NYSE:INGR) 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 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately INGR wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); INGR investors were disappointed as the stock returned 12.2% 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.