Is ITGR A Good Stock To Buy Now According To Hedge Funds?

In this article you are going to find out whether hedge funds think Integer Holdings Corporation (NYSE:ITGR) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is ITGR a good stock to buy now? Hedge funds were taking a bullish view. The number of long hedge fund bets increased by 5 in recent months. Integer Holdings Corporation (NYSE:ITGR) was in 22 hedge funds’ portfolios at the end of September. The all time high for this statistic is 29. Our calculations also showed that ITGR isn’t among the 30 most popular stocks among hedge funds (click for Q3 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.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 66 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

David Brown Hawk Ridge Partners

David Brown of Hawk Ridge Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s view the fresh hedge fund action encompassing Integer Holdings Corporation (NYSE:ITGR).

Do Hedge Funds Think ITGR Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from the second quarter of 2020. On the other hand, there were a total of 17 hedge funds with a bullish position in ITGR a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Integer Holdings Corporation (NYSE:ITGR) was held by Fisher Asset Management, which reported holding $41.6 million worth of stock at the end of September. It was followed by Hawk Ridge Management with a $39.3 million position. Other investors bullish on the company included Renaissance Technologies, Arrowstreet Capital, and Diamond Hill Capital. In terms of the portfolio weights assigned to each position Hawk Ridge Management allocated the biggest weight to Integer Holdings Corporation (NYSE:ITGR), around 3.35% of its 13F portfolio. Sio Capital is also relatively very bullish on the stock, setting aside 1.51 percent of its 13F equity portfolio to ITGR.

As aggregate interest increased, specific money managers were leading the bulls’ herd. Hawk Ridge Management, managed by David Brown, assembled the most valuable position in Integer Holdings Corporation (NYSE:ITGR). Hawk Ridge Management had $39.3 million invested in the company at the end of the quarter. Michael Castor’s Sio Capital also initiated a $7.6 million position during the quarter. The following funds were also among the new ITGR investors: D. E. Shaw’s D E Shaw, Paul Tudor Jones’s Tudor Investment Corp, and Donald Sussman’s Paloma Partners.

Let’s now take a look at hedge fund activity in other stocks similar to Integer Holdings Corporation (NYSE:ITGR). These stocks are South Jersey Industries Inc (NYSE:SJI), Medifast, Inc. (NYSE:MED), Brinker International, Inc. (NYSE:EAT), Visteon Corp (NASDAQ:VC), Cardlytics, Inc. (NASDAQ:CDLX), FormFactor, Inc. (NASDAQ:FORM), and Magellan Health Inc (NASDAQ:MGLN). This group of stocks’ market values are similar to ITGR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SJI 13 80266 -1
MED 21 316364 3
EAT 35 437585 8
VC 28 319170 5
CDLX 29 599537 2
FORM 20 92137 -3
MGLN 21 449995 -2
Average 23.9 327865 1.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $328 million. That figure was $146 million in ITGR’s case. Brinker International, Inc. (NYSE:EAT) is the most popular stock in this table. On the other hand South Jersey Industries Inc (NYSE:SJI) is the least popular one with only 13 bullish hedge fund positions. Integer Holdings Corporation (NYSE:ITGR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ITGR is 53.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on ITGR as the stock returned 29.2% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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