Were Hedge Funds Right About Crowding Into IQVIA Holdings, Inc. (IQV)?

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards IQVIA Holdings, Inc. (NYSE:IQV).

IQVIA Holdings, Inc. (NYSE:IQV) was in 66 hedge funds’ portfolios at the end of June. The all time high for this statistics is 68. IQV shareholders have witnessed an increase in support from the world’s most elite money managers of late. There were 60 hedge funds in our database with IQV positions at the end of the first quarter. Our calculations also showed that IQV isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

In the eyes of most stock holders, hedge funds are viewed as underperforming, outdated investment tools of the past. While there are greater than 8000 funds in operation at present, We look at the moguls of this group, about 850 funds. These hedge fund managers preside over the lion’s share of the smart money’s total asset base, and by paying attention to their highest performing stock picks, Insider Monkey has come up with several investment strategies that have historically outpaced the market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Third Point

Dan Loeb of Third Point

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. With all of this in mind we’re going to take a peek at the recent hedge fund action encompassing IQVIA Holdings, Inc. (NYSE:IQV).

Hedge fund activity in IQVIA Holdings, Inc. (NYSE:IQV)

Heading into the third quarter of 2020, a total of 66 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards IQV over the last 20 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is IQV A Good Stock To Buy?

The largest stake in IQVIA Holdings, Inc. (NYSE:IQV) was held by Farallon Capital, which reported holding $538.6 million worth of stock at the end of September. It was followed by Steadfast Capital Management with a $391.1 million position. Other investors bullish on the company included Third Point, D E Shaw, and Citadel Investment Group. In terms of the portfolio weights assigned to each position RIT Capital Partners allocated the biggest weight to IQVIA Holdings, Inc. (NYSE:IQV), around 19.78% of its 13F portfolio. Cowbird Capital is also relatively very bullish on the stock, designating 13.68 percent of its 13F equity portfolio to IQV.

As industrywide interest jumped, some big names have jumped into IQVIA Holdings, Inc. (NYSE:IQV) headfirst. Alyeska Investment Group, managed by Anand Parekh, created the most outsized position in IQVIA Holdings, Inc. (NYSE:IQV). Alyeska Investment Group had $40.8 million invested in the company at the end of the quarter. Kevin Molloy’s Iron Triangle Partners also initiated a $19.5 million position during the quarter. The following funds were also among the new IQV investors: David Zorub’s Parsifal Capital Management, Greg Poole’s Echo Street Capital Management, and Simon Sadler’s Segantii Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as IQVIA Holdings, Inc. (NYSE:IQV) but similarly valued. We will take a look at The Hershey Company (NYSE:HSY), CRH PLC (NYSE:CRH), ING Groep N.V. (NYSE:ING), TE Connectivity Ltd. (NYSE:TEL), American International Group Inc (NYSE:AIG), Cadence Design Systems Inc (NASDAQ:CDNS), and The Kroger Co. (NYSE:KR). This group of stocks’ market valuations match IQV’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HSY 39 1028323 6
CRH 7 76935 -3
ING 13 385807 0
TEL 39 2000251 6
AIG 40 2028685 -3
CDNS 39 1090501 8
KR 41 2361525 -2
Average 31.1 1281718 1.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.1 hedge funds with bullish positions and the average amount invested in these stocks was $1282 million. That figure was $3023 million in IQV’s case. The Kroger Co. (NYSE:KR) is the most popular stock in this table. On the other hand CRH PLC (NYSE:CRH) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks IQVIA Holdings, Inc. (NYSE:IQV) is more popular among hedge funds. Our overall hedge fund sentiment score for IQV is 89.1. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 29.2% in 2020 through October 16th but still managed to beat the market by 19.7 percentage points. Hedge funds were also right about betting on IQV as the stock returned 16% since the end of June (through 10/16) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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