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Is Innophos Holdings, Inc. (IPHS) Going to Burn These Hedge Funds?

Many investors, including Carl Icahn or Stan Druckenmiller, have been saying for a while now that the current market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the third quarter, many investors lost money due to unpredictable events such as the concerns over Valeant’s drug pricing policy that led to an overall drop among pharma stocks. Nevertheless, many of the stocks that tanked in the third quarter still sport strong fundamentals and their decline was more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Innophos Holdings, Inc. (NASDAQ:IPHS) changed recently.

Is Innophos Holdings, Inc. (NASDAQ:IPHS) a good stock to buy now? Prominent investors are buying. The number of long hedge fund positions went up by 8 lately. Innophos Holdings, Inc. (NASDAQ:IPHS) was in 22 hedge funds’ portfolios at the end of September. There were 14 hedge funds in our database with Innophos Holdings, Inc. (NASDAQ:IPHS) positions at the end of the previous quarter. At the end of this article, we will also compare Innophos Holdings, Inc. (NASDAQ:IPHS) to other stocks, including Saia Inc (NASDAQ:SAIA), Atento SA (NYSE:ATTO), and HMS Holdings Corp. (NASDAQ:HMSY) to get a better sense of its popularity.

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In the financial world, there are plenty of metrics stock market investors have at their disposal to analyze publicly traded companies. Some of the most useful metrics are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can beat the broader indices by a very impressive margin (see the details here).

Now, let’s take a glance at the latest action encompassing Innophos Holdings, Inc. (NASDAQ:IPHS).

What does the smart money think about Innophos Holdings, Inc. (NASDAQ:IPHS)?

At the end of September, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 57% from the second quarter. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies holds the most valuable position in Innophos Holdings, Inc. (NASDAQ:IPHS). Renaissance Technologies has a $16.6 million position in the stock, comprising less than 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Lee Munder Capital Group, managed by Lee Munder, which holds a $11.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism contain Stephen Loukas, David A. Lorber, Zachary George’s FrontFour Capital Group, Jay Petschek and Steven Major’s Corsair Capital Management and D E Shaw.

As aggregate interest increased, key hedge funds were leading the bulls’ herd. Hutchin Hill Capital, managed by Neil Chriss, created the most valuable position in Innophos Holdings, Inc. (NASDAQ:IPHS). Hutchin Hill Capital had $1.3 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also made a $1.1 million investment in the stock during the quarter. The other funds with new positions in the stock are David Costen Haley’s HBK Investments, Matthew Tewksbury’s Stevens Capital Management, and Joel Greenblatt’s Gotham Asset Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Innophos Holdings, Inc. (NASDAQ:IPHS) but similarly valued. We will take a look at Saia Inc (NASDAQ:SAIA), Atento SA (NYSE:ATTO), HMS Holdings Corp. (NASDAQ:HMSY), and Calavo Growers, Inc. (NASDAQ:CVGW). This group of stocks’ market valuations is similar to Innophos Holdings, Inc. (NASDAQ:IPHS)’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SAIA 20 162892 9
ATTO 5 28862 -2
HMSY 25 85073 14
CVGW 18 31164 2

As you can see, these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $69 million in Innophos Holdings, Inc. (NASDAQ:IPHS)’s case. HMS Holdings Corp. (NASDAQ:HMSY) is the most popular stock in this table. On the other hand Atento SA (NYSE:ATTO) is the least popular one with only 5 bullish hedge fund positions. Innophos Holdings, Inc. (NASDAQ:IPHS) 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, HMS Holdings Corp. (NASDAQ:HMSY) might be a better candidate to consider a long position.

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