With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Infosys Ltd ADR (NYSE:INFY).
Infosys Ltd ADR (NYSE:INFY) has seen an increase in hedge fund interest recently. INFY was in 19 hedge funds’ portfolios at the end of September. There were 17 hedge funds in our database with INFY holdings at the end of the previous quarter. 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 Netflix, Inc. (NASDAQ:NFLX), E I Du Pont De Nemours And Co (NYSE:DD), and The Bank of New York Mellon Corporation (NYSE:BK) to gather more data points.
According to most stock holders, hedge funds are perceived as underperforming, old financial vehicles of years past. While there are over 8000 funds with their doors open today, We hone in on the leaders of this club, about 700 funds. These hedge fund managers direct the majority of the smart money’s total asset base, and by observing their finest equity investments, Insider Monkey has figured out numerous investment strategies that have historically defeated the broader indices. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Now, let’s take a look at the new action encompassing Infosys Ltd ADR (NYSE:INFY).
How have hedgies been trading Infosys Ltd ADR (NYSE:INFY)?
Heading into Q4, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from the previous quarter. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Fisher’s Fisher Asset Management has the largest position in Infosys Ltd ADR (NYSE:INFY), worth close to $409.8 million, corresponding to 0.9% of its total 13F portfolio. Coming in second is Cliff Asness of AQR Capital Management, with a $252.5 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish include Bernard Horn’s Polaris Capital Management, Anand Parekh’s Alyeska Investment Group and Lee Munder’s Lee Munder Capital Group.
As one would reasonably expect, key hedge funds have jumped into Infosys Ltd ADR (NYSE:INFY) headfirst. Lee Munder Capital Group, managed by Lee Munder, established the biggest position in Infosys Ltd ADR (NYSE:INFY). Lee Munder Capital Group had $22.9 million invested in the company at the end of the quarter. Howard Marks’s Oaktree Capital Management also initiated a $9 million position during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Noam Gottesman’s GLG Partners.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Infosys Ltd ADR (NYSE:INFY) but similarly valued. These stocks are Netflix, Inc. (NASDAQ:NFLX), E I Du Pont De Nemours And Co (NYSE:DD), The Bank of New York Mellon Corporation (NYSE:BK), and McKesson Corporation (NYSE:MCK). All of these stocks’ market caps resemble INFY’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 54 hedge funds with bullish positions and the average amount invested in these stocks was $4.62 billion. That figure was $892 million in INFY’s case. McKesson Corporation (NYSE:MCK) is the most popular stock in this table. On the other hand E I Du Pont De Nemours And Co (NYSE:DD) is the least popular one with only 41 bullish hedge fund positions. Compared to these stocks Infosys Ltd ADR (NYSE:INFY) is even less popular than DD. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.