It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren’t usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index’s returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you’d fail to beat the market. At the same time, the 20 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated an outperformance of 6 percentage points during the first 5 months of 2019. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Ingevity Corporation (NYSE:NGVT).
Ingevity Corporation (NYSE:NGVT) investors should be aware of an increase in hedge fund sentiment of late. Our calculations also showed that ngvt isn’t among the 30 most popular stocks among hedge funds.
To the average investor there are numerous gauges shareholders have at their disposal to evaluate their holdings. A couple of the less utilized gauges are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can beat their index-focused peers by a superb amount (see the details here).
Let’s analyze the latest hedge fund action surrounding Ingevity Corporation (NYSE:NGVT).
Hedge fund activity in Ingevity Corporation (NYSE:NGVT)
Heading into the second quarter of 2019, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 35% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards NGVT over the last 15 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Balyasny Asset Management, managed by Dmitry Balyasny, holds the most valuable position in Ingevity Corporation (NYSE:NGVT). Balyasny Asset Management has a $19.3 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Millennium Management, managed by Israel Englander, which holds a $18.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that hold long positions encompass Principal Global Investors’s Columbus Circle Investors, Ken Griffin’s Citadel Investment Group and D. E. Shaw’s D E Shaw.
As industrywide interest jumped, key money managers have jumped into Ingevity Corporation (NYSE:NGVT) headfirst. Columbus Circle Investors, managed by Principal Global Investors, established the biggest position in Ingevity Corporation (NYSE:NGVT). Columbus Circle Investors had $14.3 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $9.6 million position during the quarter. The other funds with new positions in the stock are D. E. Shaw’s D E Shaw, Jim Simons’s Renaissance Technologies, and Benjamin A. Smith’s Laurion Capital Management.
Let’s now review hedge fund activity in other stocks similar to Ingevity Corporation (NYSE:NGVT). These stocks are Methanex Corporation (NASDAQ:MEOH), Pluralsight, Inc. (NASDAQ:PS), Compañía de Minas Buenaventura S.A.A. (NYSE:BVN), and Landstar System, Inc. (NASDAQ:LSTR). This group of stocks’ market valuations are closest to NGVT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MEOH | 22 | 260832 | 1 |
| PS | 30 | 321492 | 15 |
| BVN | 7 | 16483 | 1 |
| LSTR | 23 | 208696 | 0 |
| Average | 20.5 | 201876 | 4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $202 million. That figure was $112 million in NGVT’s case. Pluralsight, Inc. (NASDAQ:PS) is the most popular stock in this table. On the other hand Compañía de Minas Buenaventura S.A.A. (NYSE:BVN) is the least popular one with only 7 bullish hedge fund positions. Ingevity Corporation (NYSE:NGVT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately NGVT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on NGVT were disappointed as the stock returned -15.9% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
