ICF International Inc (ICFI): Are Hedge Funds Right About This Stock?

There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze ICF International Inc (NASDAQ:ICFI).

ICF International Inc (NASDAQ:ICFI) was in 11 hedge funds’ portfolios at the end of September. ICFI investors should pay attention to an increase in hedge fund sentiment recently. There were 9 hedge funds in our database with ICFI holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG), Klondex Mines Ltd (NYSE:KLDX), and Teladoc Inc (NYSE:TDOC) to gather more data points.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

Hedge fund activity in ICF International Inc (NASDAQ:ICFI)

At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 22% rise from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards ICFI over the last 5 quarters, which trended down slightly. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Martin Whitman’s Third Avenue Management has the largest position in ICF International Inc (NASDAQ:ICFI), worth close to $7.5 million. Sitting at the No. 2 spot is Renaissance Technologies, one of the largest hedge funds in the world, with a $6.8 million position. Some other members of the smart money with similar optimism include David E. Shaw’s D E Shaw, Chuck Royce’s Royce & Associates, and Cliff Asness’ AQR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

With general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Citadel Investment Group, led by Ken Griffin, created the most valuable position in ICF International Inc (NASDAQ:ICFI). Citadel Investment Group had $0.3 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital also initiated a small position during the quarter.

Let’s also examine hedge fund activity in other stocks similar to ICF International Inc (NASDAQ:ICFI). We will take a look at AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG), Klondex Mines Ltd (NYSE:KLDX), Teladoc Inc (NYSE:TDOC), and Meridian Interstate Bancorp, Inc. (NASDAQ:EBSB). This group of stocks’ market valuations resemble ICFI’s market valuation.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $116 million. That figure was $38 million in ICFI’s case. AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG) is the most popular stock in this table. On the other hand Teladoc Inc (NYSE:TDOC) is the least popular one with only 6 bullish hedge fund positions. ICF International Inc (NASDAQ:ICFI) 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. In this regard AMAG might be a better candidate to consider taking a long position in.

Disclosure: None