In this article we will check out the progression of hedge fund sentiment towards IDACORP Inc (NYSE:IDA) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is IDA a good stock to buy? IDACORP Inc (NYSE:IDA) was in 31 hedge funds’ portfolios at the end of September. The all time high for this statistic is 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. IDA investors should be aware of an increase in enthusiasm from smart money recently. There were 22 hedge funds in our database with IDA holdings at the end of June. Our calculations also showed that IDA 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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 view the new hedge fund action surrounding IDACORP Inc (NYSE:IDA).
Do Hedge Funds Think IDA Is A Good Stock To Buy Now?
At the end of September, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 41% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards IDA over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in IDACORP Inc (NYSE:IDA), which was worth $61.4 million at the end of the third quarter. On the second spot was D E Shaw which amassed $43.8 million worth of shares. Lansdowne Partners, Millennium Management, and AQR 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 Lansdowne Partners allocated the biggest weight to IDACORP Inc (NYSE:IDA), around 1.01% of its 13F portfolio. Cerebellum Capital is also relatively very bullish on the stock, earmarking 0.3 percent of its 13F equity portfolio to IDA.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Lansdowne Partners, managed by Suzi Nutton (CEO), initiated the largest position in IDACORP Inc (NYSE:IDA). Lansdowne Partners had $25 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $4.6 million position during the quarter. The following funds were also among the new IDA investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Paul Tudor Jones’s Tudor Investment Corp, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s also examine hedge fund activity in other stocks similar to IDACORP Inc (NYSE:IDA). These stocks are LendingTree, Inc (NASDAQ:TREE), Cullen/Frost Bankers, Inc. (NYSE:CFR), Cyberark Software Ltd (NASDAQ:CYBR), Premier Inc (NASDAQ:PINC), Xerox Holdings Corporation (NYSE:XRX), Cameco Corporation (NYSE:CCJ), and Janus Henderson Group plc (NYSE:JHG). All of these stocks’ market caps are closest to IDA’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.4 hedge funds with bullish positions and the average amount invested in these stocks was $308 million. That figure was $228 million in IDA’s case. Xerox Holdings Corporation (NYSE:XRX) is the most popular stock in this table. On the other hand Premier Inc (NASDAQ:PINC) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks IDACORP Inc (NYSE:IDA) is more popular among hedge funds. Our overall hedge fund sentiment score for IDA is 90. 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 returned 33.3% in 2020 through December 18th but still managed to beat the market by 16.4 percentage points. Hedge funds were also right about betting on IDA as the stock returned 19.7% since the end of September (through 12/18) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.