In this article we will take a look at whether hedge funds think IHS Markit Ltd. (NYSE:INFO) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is INFO a good stock to buy now? IHS Markit Ltd. (NYSE:INFO) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 44 hedge funds’ portfolios at the end of September. Our calculations also showed that INFO 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). At the end of this article we will also compare INFO to other stocks including Walgreens Boots Alliance Inc (NASDAQ:WBA), Agilent Technologies Inc. (NYSE:A), and Datadog, Inc. (NASDAQ:DDOG) to get a better sense of its popularity.
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 was 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 cannabis tech 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. Now let’s view the key hedge fund action regarding IHS Markit Ltd. (NYSE:INFO).
Do Hedge Funds Think INFO Is A Good Stock To Buy Now?
At third quarter’s end, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards INFO over the last 21 quarters. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in IHS Markit Ltd. (NYSE:INFO) was held by Select Equity Group, which reported holding $367 million worth of stock at the end of September. It was followed by Farallon Capital with a $299.4 million position. Other investors bullish on the company included Echo Street Capital Management, Citadel Investment Group, and D E Shaw. In terms of the portfolio weights assigned to each position Strycker View Capital allocated the biggest weight to IHS Markit Ltd. (NYSE:INFO), around 5.5% of its 13F portfolio. Corsair Capital Management is also relatively very bullish on the stock, setting aside 4.69 percent of its 13F equity portfolio to INFO.
Since IHS Markit Ltd. (NYSE:INFO) has experienced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedgies that decided to sell off their positions entirely last quarter. Interestingly, James Parsons’s Junto Capital Management said goodbye to the largest investment of all the hedgies followed by Insider Monkey, comprising an estimated $107.2 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund sold off about $42.2 million worth. These moves are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as IHS Markit Ltd. (NYSE:INFO) but similarly valued. These stocks are Walgreens Boots Alliance Inc (NASDAQ:WBA), Agilent Technologies Inc. (NYSE:A), Datadog, Inc. (NASDAQ:DDOG), Banco Santander, S.A. (NYSE:SAN), WEC Energy Group, Inc. (NYSE:WEC), The Bank of New York Mellon Corporation (NYSE:BK), and Johnson Controls International plc (NYSE:JCI). This group of stocks’ market values resemble INFO’s market value.
|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 31.7 hedge funds with bullish positions and the average amount invested in these stocks was $1600 million. That figure was $1284 million in INFO’s case. The Bank of New York Mellon Corporation (NYSE:BK) is the most popular stock in this table. On the other hand Banco Santander, S.A. (NYSE:SAN) is the least popular one with only 14 bullish hedge fund positions. IHS Markit Ltd. (NYSE:INFO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for INFO is 79.1. 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. Hedge funds were also right about betting on INFO as the stock returned 17.5% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.