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Were Hedge Funds Right About ICF International Inc (ICFI)?

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of ICF International Inc (NASDAQ:ICFI) based on that data.

ICF International Inc (NASDAQ:ICFI) shares haven’t seen a lot of action during the fourth quarter. Overall, hedge fund sentiment was unchanged. The stock was in 11 hedge funds’ portfolios at the end of December. 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 BRP Inc. (NASDAQ:DOOO), Hecla Mining Company (NYSE:HL), and Tilray, Inc. (NASDAQ:TLRY) to gather more data points. Our calculations also showed that ICFI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

To the average investor there are tons of formulas investors have at their disposal to size up publicly traded companies. A couple of the most underrated formulas are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can trounce the market by a superb amount (see the details here).

Martin Whitman Third Avenue Management Marty Whitman

Martin Whitman of Third Avenue Management

We leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve and other Central Banks are tripping over each other to print more money. As a result, we believe gold stocks will outperform fixed income ETFs in the long-term. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the key hedge fund action encompassing ICF International Inc (NASDAQ:ICFI).

What have hedge funds been doing with ICF International Inc (NASDAQ:ICFI)?

At Q4’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ICFI over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

More specifically, Driehaus Capital was the largest shareholder of ICF International Inc (NASDAQ:ICFI), with a stake worth $9.7 million reported as of the end of September. Trailing Driehaus Capital was Third Avenue Management, which amassed a stake valued at $8.6 million. AQR Capital Management, Winton Capital Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Third Avenue Management allocated the biggest weight to ICF International Inc (NASDAQ:ICFI), around 0.85% of its 13F portfolio. Driehaus Capital is also relatively very bullish on the stock, dishing out 0.26 percent of its 13F equity portfolio to ICFI.

Judging by the fact that ICF International Inc (NASDAQ:ICFI) has experienced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of funds that elected to cut their entire stakes heading into Q4. Interestingly, Renaissance Technologies dropped the largest stake of the “upper crust” of funds watched by Insider Monkey, valued at about $2.9 million in stock. Hoon Kim’s fund, Quantinno Capital, also sold off its stock, about $0.3 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to ICF International Inc (NASDAQ:ICFI). These stocks are BRP Inc. (NASDAQ:DOOO), Hecla Mining Company (NYSE:HL), Tilray, Inc. (NASDAQ:TLRY), and CSG Systems International, Inc. (NASDAQ:CSGS). This group of stocks’ market caps match ICFI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DOOO 9 126097 -1
HL 14 78944 4
TLRY 15 41042 0
CSGS 23 238394 3
Average 15.25 121119 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $29 million in ICFI’s case. CSG Systems International, Inc. (NASDAQ:CSGS) is the most popular stock in this table. On the other hand BRP Inc. (NASDAQ:DOOO) is the least popular one with only 9 bullish hedge fund positions. ICF International Inc (NASDAQ:ICFI) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but beat the market by 4.2 percentage points. Unfortunately ICFI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ICFI investors were disappointed as the stock returned -24.5% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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