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InterContinental Hotels Group PLC (IHG): Hedge Funds’ Least Favorite Stock?

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 first 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 4.5 years and analyze what the smart money thinks of InterContinental Hotels Group PLC (NYSE:IHG) based on that data.

Is InterContinental Hotels Group PLC (NYSE:IHG) a bargain? The best stock pickers are becoming less confident. The number of long hedge fund positions fell by 2 in recent months. Our calculations also showed that IHG 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). IHG was in 4 hedge funds’ portfolios at the end of the first quarter of 2020. There were 6 hedge funds in our database with IHG positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a lot of tools shareholders use to value stocks. A couple of the most under-the-radar tools are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can trounce the broader indices by a very impressive margin (see the details here).

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. 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. With all of this in mind let’s check out the key hedge fund action encompassing InterContinental Hotels Group PLC (NYSE:IHG).

What have hedge funds been doing with InterContinental Hotels Group PLC (NYSE:IHG)?

At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the previous quarter. On the other hand, there were a total of 5 hedge funds with a bullish position in IHG a year ago. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the biggest position in InterContinental Hotels Group PLC (NYSE:IHG), worth close to $7.3 million, comprising less than 0.1%% of its total 13F portfolio. Coming in second is Two Sigma Advisors, led by John Overdeck and David Siegel, holding a $1.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism contain D. E. Shaw’s D E Shaw, Israel Englander’s Millennium Management and . In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to InterContinental Hotels Group PLC (NYSE:IHG), around 0.01% of its 13F portfolio. Two Sigma Advisors is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to IHG.

Since InterContinental Hotels Group PLC (NYSE:IHG) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedgies that elected to cut their full holdings heading into Q4. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the biggest investment of all the hedgies tracked by Insider Monkey, totaling an estimated $7.7 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its stock, about $3.3 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds heading into Q4.

Let’s check out hedge fund activity in other stocks similar to InterContinental Hotels Group PLC (NYSE:IHG). These stocks are Brookfield Property Partners LP (NASDAQ:BPY), Bilibili Inc. (NASDAQ:BILI), United Rentals, Inc. (NYSE:URI), and Sarepta Therapeutics Inc (NASDAQ:SRPT). This group of stocks’ market valuations are closest to IHG’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BPY 7 42640 -1
BILI 24 731095 1
URI 43 752405 -11
SRPT 33 905750 -9
Average 26.75 607973 -5

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $608 million. That figure was $10 million in IHG’s case. United Rentals, Inc. (NYSE:URI) is the most popular stock in this table. On the other hand Brookfield Property Partners LP (NASDAQ:BPY) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks InterContinental Hotels Group PLC (NYSE:IHG) is even less popular than BPY. Hedge funds dodged a bullet by taking a bearish stance towards IHG. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately IHG wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); IHG investors were disappointed as the stock returned 16.2% during the second quarter (through the end of May) 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 so far in 2020.

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

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