Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Is Investors Bancorp, Inc. (NASDAQ:ISBC) a good investment today? Investors who are in the know are turning less bullish. The number of long hedge fund positions were trimmed by 1 in recent months. 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 Jabil Circuit, Inc. (NYSE:JBL), Fair Isaac Corporation (NYSE:FICO), and Woodward Inc (NASDAQ:WWD) to gather more data points.
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.
With all of this in mind, we’re going to check out the key action regarding Investors Bancorp, Inc. (NASDAQ:ISBC).
Hedge fund activity in Investors Bancorp, Inc. (NASDAQ:ISBC)
At Q3’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, down 4% from one quarter earlier. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Clifton S. Robbins’s Blue Harbour Group has the largest position in Investors Bancorp, Inc. (NASDAQ:ISBC), worth close to $357.1 million, corresponding to 13.2% of its total 13F portfolio. The second most bullish fund manager is Hoplite Capital Management, managed by John Lykouretzos, which holds a $84.1 million position; 3.9% of its 13F portfolio is allocated to the stock. Other peers with similar optimism consist of Michael A. Price and Amos Meron’s Empyrean Capital Partners, Jim Simons’s Renaissance Technologies and John Overdeck and David Siegel’s Two Sigma Advisors.
Seeing as Investors Bancorp, Inc. (NASDAQ:ISBC) has witnessed a decline in interest from the smart money, it’s easy to see that there is a sect of hedge funds that slashed their entire stakes by the end of the third quarter. At the top of the heap, Peter Muller’s PDT Partners dropped the biggest investment of the “upper crust” of funds watched by Insider Monkey, comprising about $0.7 million in stock. Emanuel J. Friedman’s fund, EJF Capital, also dropped its stock, about $0.6 million worth of ISBC shares. These moves are interesting, as total hedge fund interest dropped by 1 fund by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Investors Bancorp, Inc. (NASDAQ:ISBC). These stocks are Jabil Circuit, Inc. (NYSE:JBL), Fair Isaac Corporation (NYSE:FICO), Woodward Inc (NASDAQ:WWD), and Research In Motion Ltd (NASDAQ:BBRY). All of these stocks’ market caps are closest to ISBC’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 19 hedge funds with bullish positions and the average amount invested in these stocks was $395 million. That figure was $610 million in ISBC’s case. Fair Isaac Corporation (NYSE:FICO) is the most popular stock in this table. On the other hand Woodward Inc (NASDAQ:WWD) is the least popular one with only 8 bullish hedge fund positions. Investors Bancorp, Inc. (NASDAQ:ISBC) 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 FICO might be a better candidate to consider a long position.