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Were Hedge Funds Right About Inogen Inc (INGN)?

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 this article we are going to take a closer look at the hedge fund sentiment surrounding Inogen Inc (NASDAQ:INGN).

Is Inogen Inc (NASDAQ:INGN) a buy here? The smart money is getting more optimistic. The number of bullish hedge fund bets inched up by 4 recently. Our calculations also showed that INGN 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).

If you’d ask most stock holders, hedge funds are seen as slow, outdated financial tools of yesteryear. While there are greater than 8000 funds with their doors open at present, Our researchers hone in on the top tier of this group, about 850 funds. It is estimated that this group of investors direct the majority of the smart money’s total capital, and by watching their best stock picks, Insider Monkey has formulated various investment strategies that have historically outpaced the market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

We leave no stone unturned when looking for the next great investment idea. For example, this investor can predict short term winners following earnings announcements with 77% accuracy, so we check out his stock picks. A former hedge fund manager is pitching the “next Amazon” in this video; again we are listening. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. With all of this in mind we’re going to check out the latest hedge fund action encompassing Inogen Inc (NASDAQ:INGN).

What have hedge funds been doing with Inogen Inc (NASDAQ:INGN)?

At Q4’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from one quarter earlier. By comparison, 25 hedge funds held shares or bullish call options in INGN a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

More specifically, AQR Capital Management was the largest shareholder of Inogen Inc (NASDAQ:INGN), with a stake worth $58.6 million reported as of the end of September. Trailing AQR Capital Management was D E Shaw, which amassed a stake valued at $24.9 million. Two Sigma Advisors, Renaissance Technologies, and Point72 Asset Management 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 Tamarack Capital Management allocated the biggest weight to Inogen Inc (NASDAQ:INGN), around 1.14% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, earmarking 0.54 percent of its 13F equity portfolio to INGN.

As one would reasonably expect, key money managers were leading the bulls’ herd. Point72 Asset Management, managed by Steve Cohen, initiated the most valuable position in Inogen Inc (NASDAQ:INGN). Point72 Asset Management had $12.4 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also made a $9.2 million investment in the stock during the quarter. The other funds with brand new INGN positions are Justin John Ferayorni’s Tamarack Capital Management, Michael Gelband’s ExodusPoint Capital, and Donald Sussman’s Paloma Partners.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Inogen Inc (NASDAQ:INGN) but similarly valued. These stocks are Office Depot Inc (NASDAQ:ODP), Tri Continental Corporation (NYSE:TY), Compass Diversified Holdings (NYSE:CODI), and Dycom Industries, Inc. (NYSE:DY). All of these stocks’ market caps are similar to INGN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ODP 16 104972 0
TY 2 1464 1
CODI 6 7893 1
DY 18 92693 -1
Average 10.5 51756 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $170 million in INGN’s case. Dycom Industries, Inc. (NYSE:DY) is the most popular stock in this table. On the other hand Tri Continental Corporation (NYSE:TY) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Inogen Inc (NASDAQ:INGN) is more popular among hedge funds. 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 gained 1.0% in 2020 through May 1st and still beat the market by 12.9 percentage points. Unfortunately INGN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on INGN were disappointed as the stock returned -24.6% during the four months of 2020 (through May 1st) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 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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