Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Interpublic Group of Companies Inc (NYSE:IPG).
Interpublic Group of Companies Inc (NYSE:IPG) investors should pay attention to a decrease in hedge fund interest lately. IPG was in 31 hedge funds’ portfolios at the end of September. There had been 35 hedge funds in our database with IPG holdings at the end of the previous quarter.At the end of this article we will also compare IPG to other stocks including Lincoln National Corporation (NYSE:LNC), Wynn Resorts, Limited (NASDAQ:WYNN), and Duke Realty Corp (NYSE:DRE) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
What does the smart money think about Interpublic Group of Companies Inc (NYSE:IPG)?
Heading into the fourth quarter of 2016, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, down by 11% over the quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Paul Singer’s Elliott Management has the number one position in Interpublic Group of Companies Inc (NYSE:IPG), worth close to $258.1 million, corresponding to 2.1% of its total 13F portfolio. Coming in second is Pzena Investment Management, led by Richard S. Pzena, holding a $247.8 million position; 1.5% of its 13F portfolio is allocated to the stock. Some other peers that are bullish contain John W. Rogers’ Ariel Investments, Jeffrey Tannenbaum’s Fir Tree and Mario Gabelli’s GAMCO Investors.
Due to the fact that Interpublic Group of Companies Inc (NYSE:IPG) has experienced declining sentiment from the smart money, it’s easy to see that there exists a select few fund managers that decided to sell off their entire stakes heading into Q4. Interestingly, Jim Simons’ Renaissance Technologies said goodbye to the biggest position of the “upper crust” of funds watched by Insider Monkey, totaling about $63.6 million in stock, and Clint Carlson’s Carlson Capital was right behind this move, as the fund sold off about $19.3 million worth of shares.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Interpublic Group of Companies Inc (NYSE:IPG) but similarly valued. These stocks are Lincoln National Corporation (NYSE:LNC), Wynn Resorts, Limited (NASDAQ:WYNN), Duke Realty Corp (NYSE:DRE), and Snap-on Incorporated (NYSE:SNA). All of these stocks’ market caps match IPG’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $902 million. That figure was $1.27 billion in IPG’s case. Wynn Resorts, Limited (NASDAQ:WYNN) is the most popular stock in this table. On the other hand Duke Realty Corp (NYSE:DRE) is the least popular one with only 11 bullish hedge fund positions. Interpublic Group of Companies Inc (NYSE:IPG) 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 WYNN might be a better candidate to consider a long position.