“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Intra-Cellular Therapies Inc (NASDAQ:ITCI) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Intra-Cellular Therapies Inc (NASDAQ:ITCI) was in 12 hedge funds’ portfolios at the end of the first quarter of 2019. ITCI has seen a decrease in support from the world’s most elite money managers of late. There were 15 hedge funds in our database with ITCI positions at the end of the previous quarter. Our calculations also showed that itci isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Let’s review the latest hedge fund action surrounding Intra-Cellular Therapies Inc (NASDAQ:ITCI).
How have hedgies been trading Intra-Cellular Therapies Inc (NASDAQ:ITCI)?
At Q1’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ITCI over the last 15 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Samlyn Capital, managed by Robert Pohly, holds the largest position in Intra-Cellular Therapies Inc (NASDAQ:ITCI). Samlyn Capital has a $16.6 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, led by Israel Englander, holding a $8.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that hold long positions comprise Principal Global Investors’s Columbus Circle Investors, D. E. Shaw’s D E Shaw and Noam Gottesman’s GLG Partners.
Due to the fact that Intra-Cellular Therapies Inc (NASDAQ:ITCI) has experienced a decline in interest from the smart money, we can see that there lies a certain “tier” of funds that decided to sell off their entire stakes in the third quarter. It’s worth mentioning that Steve Cohen’s Point72 Asset Management sold off the largest investment of the 700 funds watched by Insider Monkey, comprising about $3.4 million in stock, and Thomas Steyer’s Farallon Capital was right behind this move, as the fund dumped about $2.8 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 3 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Intra-Cellular Therapies Inc (NASDAQ:ITCI) but similarly valued. These stocks are Global Partners LP (NYSE:GLP), Axonics Modulation Technologies, Inc. (NASDAQ:AXNX), QuinStreet Inc (NASDAQ:QNST), and Urstadt Biddle Properties Inc. (NYSE:UBP). This group of stocks’ market valuations match ITCI’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GLP | 5 | 2786 | 1 |
| AXNX | 10 | 85113 | 0 |
| QNST | 25 | 200135 | -2 |
| UBP | 2 | 12578 | 0 |
| Average | 10.5 | 75153 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $44 million in ITCI’s case. QuinStreet Inc (NASDAQ:QNST) is the most popular stock in this table. On the other hand Urstadt Biddle Properties Inc. (NYSE:UBP) is the least popular one with only 2 bullish hedge fund positions. Intra-Cellular Therapies Inc (NASDAQ:ITCI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on ITCI as the stock returned 15.7% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
