Is IES Holdings, Inc. (NASDAQ:IESC) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is IESC a good stock to buy now? Hedge funds were turning bullish. The number of bullish hedge fund bets inched up by 1 recently. IES Holdings, Inc. (NASDAQ:IESC) was in 9 hedge funds’ portfolios at the end of September. The all time high for this statistics is 11. Our calculations also showed that IESC 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). There were 8 hedge funds in our database with IESC positions at the end of the second quarter.
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 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 we’re going to take a gander at the new hedge fund action encompassing IES Holdings, Inc. (NASDAQ:IESC).
Do Hedge Funds Think IESC Is A Good Stock To Buy Now?
At third quarter’s end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in IESC 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.
According to Insider Monkey’s hedge fund database, Tontine Asset Management, managed by Jeffrey Gendell, holds the number one position in IES Holdings, Inc. (NASDAQ:IESC). Tontine Asset Management has a $364 million position in the stock, comprising 76.6% of its 13F portfolio. On Tontine Asset Management’s heels is Chuck Royce of Royce & Associates, with a $26.7 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish encompass Renaissance Technologies, Touk Sinantha’s AltraVue Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Tontine Asset Management allocated the biggest weight to IES Holdings, Inc. (NASDAQ:IESC), around 76.59% of its 13F portfolio. AltraVue Capital is also relatively very bullish on the stock, setting aside 2.81 percent of its 13F equity portfolio to IESC.
Now, key hedge funds were leading the bulls’ herd. Wexford Capital, managed by Charles Davidson and Joseph Jacobs, created the biggest position in IES Holdings, Inc. (NASDAQ:IESC). Wexford Capital had $0.2 million invested in the company at the end of the quarter.
Let’s also examine hedge fund activity in other stocks similar to IES Holdings, Inc. (NASDAQ:IESC). We will take a look at UP Fintech Holding Limited (NASDAQ:TIGR), Quotient Technology Inc (NYSE:QUOT), Eastman Kodak Co. (NYSE:KODK), Immatics N.V. (NASDAQ:IMTX), Himax Technologies, Inc. (NASDAQ:HIMX), Meta Financial Group Inc. (NASDAQ:CASH), and Conduent Incorporated (NYSE:CNDT). This group of stocks’ market values resemble IESC’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 12.3 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $412 million in IESC’s case. Immatics N.V. (NASDAQ:IMTX) is the most popular stock in this table. On the other hand UP Fintech Holding Limited (NASDAQ:TIGR) is the least popular one with only 6 bullish hedge fund positions. IES Holdings, Inc. (NASDAQ:IESC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IESC is 39.9. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on IESC as the stock returned 31.8% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.