Is IMAX Corporation (IMAX) Going to Burn These Hedge Funds?

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought IMAX Corporation (NYSE:IMAX) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

IMAX Corporation (NYSE:IMAX) has seen an increase in enthusiasm from smart money lately. IMAX Corporation (NYSE:IMAX) was in 19 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 21. There were 17 hedge funds in our database with IMAX positions at the end of the first quarter. Our calculations also showed that IMAX isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

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 58 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.


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 are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. With all of this in mind we’re going to check out the fresh hedge fund action surrounding IMAX Corporation (NYSE:IMAX).

How are hedge funds trading IMAX Corporation (NYSE:IMAX)?

At second quarter’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the previous quarter. The graph below displays the number of hedge funds with bullish position in IMAX over the last 20 quarters. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Is IMAX A Good Stock To Buy?

Among these funds, Renaissance Technologies held the most valuable stake in IMAX Corporation (NYSE:IMAX), which was worth $19.8 million at the end of the third quarter. On the second spot was Private Capital Management which amassed $14.7 million worth of shares. Arrowstreet Capital, Millennium Management, and Two Sigma Advisors 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 Private Capital Management allocated the biggest weight to IMAX Corporation (NYSE:IMAX), around 3.63% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, setting aside 0.12 percent of its 13F equity portfolio to IMAX.

Consequently, key hedge funds have been driving this bullishness. AlphaCrest Capital Management, managed by Mika Toikka, assembled the most outsized position in IMAX Corporation (NYSE:IMAX). AlphaCrest Capital Management had $0.2 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0.2 million investment in the stock during the quarter. The following funds were also among the new IMAX investors: Dmitry Balyasny’s Balyasny Asset Management and David Andre and Astro Teller’s Cerebellum Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as IMAX Corporation (NYSE:IMAX) but similarly valued. These stocks are Premier Financial Corp. (NASDAQ:PFC), Quotient Technology Inc (NYSE:QUOT), Eagle Pharmaceuticals Inc (NASDAQ:EGRX), Vaxart, Inc. (NASDAQ:VXRT), Goldman Sachs BDC, Inc. (NYSE:GSBD), Ambac Financial Group, Inc. (NASDAQ:AMBC), and Castle Biosciences, Inc. (NASDAQ:CSTL). All of these stocks’ market caps resemble IMAX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PFC 10 48067 0
QUOT 13 268771 -5
EGRX 16 132753 1
VXRT 7 57573 3
GSBD 1 2772 0
AMBC 16 62747 1
CSTL 18 82390 9
Average 11.6 93582 1.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.6 hedge funds with bullish positions and the average amount invested in these stocks was $94 million. That figure was $65 million in IMAX’s case. Castle Biosciences, Inc. (NASDAQ:CSTL) is the most popular stock in this table. On the other hand Goldman Sachs BDC, Inc. (NYSE:GSBD) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks IMAX Corporation (NYSE:IMAX) is more popular among hedge funds. Our overall hedge fund sentiment score for IMAX is 84.1. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. Unfortunately IMAX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on IMAX were disappointed as the stock returned 6.7% during the third quarter 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 in 2020.

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