The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 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 March 31st, a week after the market trough. In this article we look at what those investors think of Installed Building Products Inc (NYSE:IBP).
Installed Building Products Inc (NYSE:IBP) investors should pay attention to a decrease in hedge fund sentiment of late. IBP was in 21 hedge funds’ portfolios at the end of the first quarter of 2020. There were 24 hedge funds in our database with IBP positions at the end of the previous quarter. Our calculations also showed that IBP isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
David Brown of Hawk Ridge Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a gander at the key hedge fund action encompassing Installed Building Products Inc (NYSE:IBP).
How are hedge funds trading Installed Building Products Inc (NYSE:IBP)?
At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in IBP a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, GMT Capital held the most valuable stake in Installed Building Products Inc (NYSE:IBP), which was worth $18.3 million at the end of the third quarter. On the second spot was Hawk Ridge Management which amassed $13.5 million worth of shares. SG Capital Management, Driehaus Capital, and Citadel Investment Group 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 SG Capital Management allocated the biggest weight to Installed Building Products Inc (NYSE:IBP), around 4.43% of its 13F portfolio. Blue Grotto Capital is also relatively very bullish on the stock, dishing out 3.51 percent of its 13F equity portfolio to IBP.
Due to the fact that Installed Building Products Inc (NYSE:IBP) has experienced falling interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers that slashed their full holdings last quarter. Intriguingly, Zachary Sternberg and Benjamin Stein’s Spruce House Investment Management dropped the biggest stake of all the hedgies watched by Insider Monkey, valued at about $27.7 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund sold off about $2.4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Installed Building Products Inc (NYSE:IBP). These stocks are Essential Properties Realty Trust, Inc. (NYSE:EPRT), Global Net Lease, Inc. (NYSE:GNL), Regenxbio Inc (NASDAQ:RGNX), and Veracyte Inc (NASDAQ:VCYT). This group of stocks’ market valuations are closest to IBP’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EPRT | 8 | 11280 | -1 |
| GNL | 7 | 24660 | -3 |
| RGNX | 19 | 185637 | 0 |
| VCYT | 12 | 58406 | -2 |
| Average | 11.5 | 69996 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $70 million. That figure was $86 million in IBP’s case. Regenxbio Inc (NASDAQ:RGNX) is the most popular stock in this table. On the other hand Global Net Lease, Inc. (NYSE:GNL) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Installed Building Products Inc (NYSE:IBP) is more popular among hedge funds. 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 returned 12.2% in 2020 through June 17th but still managed to beat the market by 14.8 percentage points. Hedge funds were also right about betting on IBP as the stock returned 79.9% so far in Q2 (through June 17th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
