Installed Building Products Inc (IBP): Hedge Funds In Wait-and-See Mode

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Installed Building Products Inc (NYSE:IBP) based on that data and determine whether they were really smart about the stock.

Hedge fund interest in Installed Building Products Inc (NYSE:IBP) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that IBP isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). 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 Synaptics Incorporated (NASDAQ:SYNA), Pacific Premier Bancorp, Inc. (NASDAQ:PPBI), and Outfront Media Inc. (REIT) (NYSE:OUT) to gather more data points. Our calculations also showed that IBP isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

To most stock holders, hedge funds are seen as unimportant, old investment vehicles of the past. While there are over 8000 funds in operation at present, We choose to focus on the elite of this club, about 850 funds. These money managers watch over bulk of all hedge funds’ total asset base, and by paying attention to their inimitable equity investments, Insider Monkey has unsheathed a number of investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

David Brown Hawk Ridge Partners

David Brown of Hawk Ridge Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock. We are also checking out this lithium company which could benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind we’re going to take a gander at the key hedge fund action encompassing Installed Building Products Inc (NYSE:IBP).

What have hedge funds been doing with Installed Building Products Inc (NYSE:IBP)?

At Q2’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in IBP a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Renaissance Technologies was the largest shareholder of Installed Building Products Inc (NYSE:IBP), with a stake worth $15.3 million reported as of the end of September. Trailing Renaissance Technologies was GMT Capital, which amassed a stake valued at $14.1 million. Hawk Ridge Management, Driehaus Capital, and SG Capital 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 Blue Grotto Capital allocated the biggest weight to Installed Building Products Inc (NYSE:IBP), around 3.49% of its 13F portfolio. SG Capital Management is also relatively very bullish on the stock, dishing out 2.01 percent of its 13F equity portfolio to IBP.

Seeing as Installed Building Products Inc (NYSE:IBP) has faced declining sentiment from hedge fund managers, it’s safe to say that there was a specific group of money managers who were dropping their full holdings heading into Q3. It’s worth mentioning that Brandon Haley’s Holocene Advisors dropped the biggest position of the “upper crust” of funds monitored by Insider Monkey, totaling about $0.4 million in stock, and Joel Greenblatt’s Gotham Asset Management was right behind this move, as the fund cut about $0.3 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Installed Building Products Inc (NYSE:IBP) but similarly valued. We will take a look at Synaptics Incorporated (NASDAQ:SYNA), Pacific Premier Bancorp, Inc. (NASDAQ:PPBI), Outfront Media Inc. (REIT) (NYSE:OUT), Tower Semiconductor Ltd. (NASDAQ:TSEM), Worthington Industries, Inc. (NYSE:WOR), CIT Group Inc. (NYSE:CIT), and Enable Midstream Partners LP (NYSE:ENBL). This group of stocks’ market values match IBP’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SYNA 28 319903 2
PPBI 11 75350 3
OUT 38 470016 8
TSEM 15 312269 4
WOR 21 77248 7
CIT 27 320526 -10
ENBL 5 11040 -1
Average 20.7 226622 1.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.7 hedge funds with bullish positions and the average amount invested in these stocks was $227 million. That figure was $118 million in IBP’s case. Outfront Media Inc. (REIT) (NYSE:OUT) is the most popular stock in this table. On the other hand Enable Midstream Partners LP (NYSE:ENBL) is the least popular one with only 5 bullish hedge fund positions. Installed Building Products Inc (NYSE:IBP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IBP is 55.5. 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 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 24.8% in 2020 through the end of third quarter and still beat the market by 19.3 percentage points. Hedge funds were also right about betting on IBP as the stock returned 47.9% during Q3 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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