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Is INC Research Holdings Inc (INCR) A Good Stock To Buy?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on INC Research Holdings Inc (NASDAQ:INCR).

Is INC Research Holdings Inc (NASDAQ:INCR) a splendid investment right now? The smart money is getting more optimistic. The number of long hedge fund bets moved up by 6 lately. 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 Steelcase Inc. (NYSE:SCS), Dril-Quip, Inc. (NYSE:DRQ), and Companhia Paranaense de Energia (ADR) (NYSE:ELP) to gather more data points.

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According to most shareholders, hedge funds are assumed to be worthless, old investment vehicles of the past. While there are more than 8000 funds trading at the moment, Our researchers look at the crème de la crème of this club, approximately 700 funds. These hedge fund managers watch over the lion’s share of the smart money’s total capital, and by keeping track of their unrivaled picks, Insider Monkey has found a number of investment strategies that have historically outstripped the broader indices. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Keeping this in mind, let’s take a look at the key action surrounding INC Research Holdings Inc (NASDAQ:INCR).

How have hedgies been trading INC Research Holdings Inc (NASDAQ:INCR)?

At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 32% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Adage Capital Management, managed by Phill Gross and Robert Atchinson, holds the number one position in INC Research Holdings Inc (NASDAQ:INCR). Adage Capital Management has an $46 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is Ken Griffin of Citadel Investment Group, with an $22 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions comprise Jeff Lignelli’s Incline Global Management, Israel Englander’s Millennium Management and Jacob Gottlieb’s Visium Asset Management.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the largest position in INC Research Holdings Inc (NASDAQ:INCR). Balyasny Asset Management had $6.6 million invested in the company at the end of the quarter. Nick Niell’s Arrowgrass Capital Partners also initiated an $3.4 million position during the quarter. The following funds were also among the new INCR investors: David Rodriguez-Fraile’s BlueMar Capital Management, David Costen Haley’s HBK Investments, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to INC Research Holdings Inc (NASDAQ:INCR). These stocks are Steelcase Inc. (NYSE:SCS), Dril-Quip, Inc. (NYSE:DRQ), Companhia Paranaense de Energia (ADR) (NYSE:ELP), and Portola Pharmaceuticals Inc (NASDAQ:PTLA). This group of stocks’ market valuations are similar to INCR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SCS 18 81789 2
DRQ 17 95756 0
ELP 5 6153 -2
PTLA 26 700448 2

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $221 million. That figure was $209 million in INCR’s case. Portola Pharmaceuticals Inc (NASDAQ:PTLA) is the most popular stock in this table. On the other hand Companhia Paranaense de Energia (ADR) (NYSE:ELP) is the least popular one with only 5 bullish hedge fund positions. INC Research Holdings Inc (NASDAQ:INCR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PTLA might be a better candidate to consider a long position.

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