Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 817 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about International General Insurance Holdings Ltd. (NASDAQ:IGIC).
Is IGIC a good stock to buy now? International General Insurance Holdings Ltd. (NASDAQ:IGIC) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds’ portfolios at the end of September. Our calculations also showed that IGIC 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). 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 Comtech Telecommunications Corp. (NASDAQ:CMTL), Cadiz Inc (NASDAQ:CDZI), and Experience Investment Corp. (NASDAQ:EXPC) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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. With all of this in mind we’re going to go over the latest hedge fund action encompassing International General Insurance Holdings Ltd. (NASDAQ:IGIC).
Do Hedge Funds Think IGIC Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. On the other hand, there were a total of 8 hedge funds with a bullish position in IGIC a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Joe DiMenna’s ZWEIG DIMENNA PARTNERS has the number one position in International General Insurance Holdings Ltd. (NASDAQ:IGIC), worth close to $5.4 million, accounting for 0.4% of its total 13F portfolio. Sitting at the No. 2 spot is Millennium Management, led by Israel Englander, holding a $2.8 million call position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other members of the smart money that are bullish encompass Brad Farber’s Atika Capital, Jeffrey Moskowitz’s Harvey Partners and Gregg Moskowitz’s Interval Partners. In terms of the portfolio weights assigned to each position Harvey Partners allocated the biggest weight to International General Insurance Holdings Ltd. (NASDAQ:IGIC), around 1.86% of its 13F portfolio. ZWEIG DIMENNA PARTNERS is also relatively very bullish on the stock, dishing out 0.37 percent of its 13F equity portfolio to IGIC.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Owl Creek Asset Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Ionic Capital Management).
Let’s now review hedge fund activity in other stocks similar to International General Insurance Holdings Ltd. (NASDAQ:IGIC). These stocks are Comtech Telecommunications Corp. (NASDAQ:CMTL), Cadiz Inc (NASDAQ:CDZI), Experience Investment Corp. (NASDAQ:EXPC), Orchid Island Capital, Inc. (NYSE:ORC), Osmotica Pharmaceuticals plc (NASDAQ:OSMT), HF Foods Group Inc. (NASDAQ:HFFG), and Cytosorbents Corp (NASDAQ:CTSO). This group of stocks’ market valuations are similar to IGIC’s market valuation.
|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 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $12 million in IGIC’s case. Experience Investment Corp. (NASDAQ:EXPC) is the most popular stock in this table. On the other hand HF Foods Group Inc. (NASDAQ:HFFG) is the least popular one with only 2 bullish hedge fund positions. International General Insurance Holdings Ltd. (NASDAQ:IGIC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IGIC is 50.1. 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 IGIC as the stock returned 15.7% 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.