Irsa Inversiones y Rprsntcins SA (IRS): Hedge Funds In Wait-and-See Mode

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Irsa Inversiones y Rprsntcins SA (NYSE:IRS), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Irsa Inversiones y Rprsntcins SA (NYSE:IRS) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 5 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that IRS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare IRS to other stocks including Aquestive Therapeutics, Inc. (NASDAQ:AQST), Quad/Graphics, Inc. (NYSE:QUAD), and Anworth Mortgage Asset Corporation (NYSE:ANH) to get a better sense of its popularity.

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

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 S&P 500 ETFs by 66 percentage points since March 2017 (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.


Israel Englander of Millennium 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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Keeping this in mind let’s take a look at the recent hedge fund action encompassing Irsa Inversiones y Rprsntcins SA (NYSE:IRS).

How are hedge funds trading Irsa Inversiones y Rprsntcins SA (NYSE:IRS)?

At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in IRS over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Autonomy Capital held the most valuable stake in Irsa Inversiones y Rprsntcins SA (NYSE:IRS), which was worth $7.5 million at the end of the third quarter. On the second spot was 683 Capital Partners which amassed $2.8 million worth of shares. Brigade Capital, Renaissance Technologies, and Millennium 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 Autonomy Capital allocated the biggest weight to Irsa Inversiones y Rprsntcins SA (NYSE:IRS), around 4.01% of its 13F portfolio. 683 Capital Partners is also relatively very bullish on the stock, earmarking 0.2 percent of its 13F equity portfolio to IRS.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s also examine hedge fund activity in other stocks similar to Irsa Inversiones y Rprsntcins SA (NYSE:IRS). These stocks are Aquestive Therapeutics, Inc. (NASDAQ:AQST), Quad/Graphics, Inc. (NYSE:QUAD), Anworth Mortgage Asset Corporation (NYSE:ANH), Green Plains Partners LP (NASDAQ:GPP), Northrim BanCorp, Inc. (NASDAQ:NRIM), Century Casinos, Inc. (NASDAQ:CNTY), and Soliton, Inc. (NASDAQ:SOLY). This group of stocks’ market values resemble IRS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AQST 8 11570 1
QUAD 8 8881 -3
ANH 11 24320 -1
GPP 2 14829 0
NRIM 11 13227 0
CNTY 10 23955 0
SOLY 1 7831 -6
Average 7.3 14945 -1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.3 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $11 million in IRS’s case. Anworth Mortgage Asset Corporation (NYSE:ANH) is the most popular stock in this table. On the other hand Soliton, Inc. (NASDAQ:SOLY) is the least popular one with only 1 bullish hedge fund positions. Irsa Inversiones y Rprsntcins SA (NYSE:IRS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IRS is 35.7. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on IRS as the stock returned 53.5% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.

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