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Is InterContinental Hotels Group PLC (IHG) Going To Burn These Hedge Funds ?

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. Insider Monkey finished processing more than 730 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 28th, 2019. What do these smart investors think about InterContinental Hotels Group PLC (NYSE:IHG)?

InterContinental Hotels Group PLC (NYSE:IHG) was in 4 hedge funds’ portfolios at the end of June. IHG shareholders have witnessed a decrease in enthusiasm from smart money recently. There were 5 hedge funds in our database with IHG positions at the end of the previous quarter. Our calculations also showed that IHG isn’t among the 30 most popular stocks among hedge funds (view the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the key hedge fund action regarding InterContinental Hotels Group PLC (NYSE:IHG).

What does smart money think about InterContinental Hotels Group PLC (NYSE:IHG)?

Heading into the third quarter of 2019, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from one quarter earlier. By comparison, 5 hedge funds held shares or bullish call options in IHG a year ago. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

IHG_oct2019

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the biggest position in InterContinental Hotels Group PLC (NYSE:IHG). Arrowstreet Capital has a $13 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, with a $5.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish contain John Overdeck and David Siegel’s Two Sigma Advisors, D. E. Shaw’s D E Shaw and .

Seeing as InterContinental Hotels Group PLC (NYSE:IHG) has faced a decline in interest from the smart money, we can see that there lies a certain “tier” of hedge funds that elected to cut their entire stakes by the end of the second quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group sold off the largest position of all the hedgies tracked by Insider Monkey, totaling about $3.8 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund dumped about $0.9 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 1 funds by the end of the second quarter.

Let’s also examine hedge fund activity in other stocks similar to InterContinental Hotels Group PLC (NYSE:IHG). We will take a look at Centrais Eletricas Brasileiras SA (NYSE:EBR), BanColombia S.A. (NYSE:CIB), Brookfield Infrastructure Partners L.P. (NYSE:BIP), and Molson Coors Brewing Company (NYSE:TAP). This group of stocks’ market caps are similar to IHG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EBR 6 23900 -2
CIB 10 159266 -1
BIP 7 44941 0
TAP 25 451878 -2
Average 12 169996 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $170 million. That figure was $22 million in IHG’s case. Molson Coors Brewing Company (NYSE:TAP) is the most popular stock in this table. On the other hand Centrais Eletricas Brasileiras SA (NYSE:EBR) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks InterContinental Hotels Group PLC (NYSE:IHG) is even less popular than EBR. Hedge funds dodged a bullet by taking a bearish stance towards IHG. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately IHG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); IHG investors were disappointed as the stock returned -6.3% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

Disclosure: None. This article was originally published at Insider Monkey.

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