Is Ingredion Inc (INGR) Going to Burn These Hedge Funds?

Is Ingredion Inc (NYSE:INGR) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments. More recently the top 30 mid-cap stocks (market caps between $1 billion and $10 billion) among hedge funds delivered an average return of 18% during the last four quarters (S&P 500 Index funds returned only 7.6% during the same period).

Is Ingredion Inc (NYSE:INGR) a marvelous investment right now? Investors who are in the know are turning bullish. The number of long hedge fund positions improved by 5 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 KeyCorp (NYSE:KEY), Interpublic Group of Companies Inc (NYSE:IPG), and Lincoln National Corporation (NYSE:LNC) to gather more data points.

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Hedge fund activity in Ingredion Inc (NYSE:INGR)

Heading into the fourth quarter of 2016, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a boost of 28% from one quarter earlier. That followed a steep decline in Q2, when hedge fund ownership slumped by over 35%. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Cliff Asness’ AQR Capital Management has the most valuable position in Ingredion Inc (NYSE:INGR), worth close to $215.4 million. The second most bullish fund manager is Ken Fisher of Fisher Asset Management, with a $101.9 million position. Remaining hedge funds and institutional investors that are bullish include Dmitry Balyasny’s Balyasny Asset Management, Mario Gabelli’s GAMCO Investors, and Israel Englander’s Millennium Management.

Now, specific money managers have been driving this bullishness. Balyasny Asset Management initiated the most outsized position in Ingredion Inc (NYSE:INGR). According to its latest 13F filing, the fund had $14.5 million invested in the company at the end of the quarter. Millennium Management also initiated a $10 million position during the quarter. The other funds with new positions in the stock are Jim Simons’ Renaissance Technologies, David E. Shaw’s D E Shaw, and George Hall’s Clinton Group.

Let’s now take a look at hedge fund activity in other stocks similar to Ingredion Inc (NYSE:INGR). We will take a look at KeyCorp (NYSE:KEY), Interpublic Group of Companies Inc (NYSE:IPG), Lincoln National Corporation (NYSE:LNC), and Wynn Resorts, Limited (NASDAQ:WYNN). This group of stocks’ market values are similar to INGR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KEY 42 727656 -4
IPG 31 1267574 -4
LNC 24 668282 0
WYNN 38 2245380 8

As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $1.23 billion. That figure was $407 million in INGR’s case. KeyCorp (NYSE:KEY) is the most popular stock in this table. On the other hand Lincoln National Corporation (NYSE:LNC) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Ingredion Inc (NYSE:INGR) is even less popular than LNC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None