Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (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. The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards IQVIA Holdings, Inc. (NYSE:IQV).
IQVIA Holdings, Inc. (NYSE:IQV) has experienced a decrease in hedge fund interest of late. Our calculations also showed that IQV 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).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 41 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.
We leave no stone unturned when looking for the next great investment idea. For example, this trader is claiming triple digit returns, so we check out his latest trade recommendations. 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. With all of this in mind let’s view the fresh hedge fund action regarding IQVIA Holdings, Inc. (NYSE:IQV).
How are hedge funds trading IQVIA Holdings, Inc. (NYSE:IQV)?
At Q4’s end, a total of 64 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -6% from the third quarter of 2019. On the other hand, there were a total of 49 hedge funds with a bullish position in IQV a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
The largest stake in IQVIA Holdings, Inc. (NYSE:IQV) was held by Glenview Capital, which reported holding $579.7 million worth of stock at the end of September. It was followed by Lone Pine Capital with a $476.2 million position. Other investors bullish on the company included Steadfast Capital Management, D E Shaw, and Third Point. In terms of the portfolio weights assigned to each position Brahman Capital allocated the biggest weight to IQVIA Holdings, Inc. (NYSE:IQV), around 10.86% of its 13F portfolio. Cowbird Capital is also relatively very bullish on the stock, dishing out 9.03 percent of its 13F equity portfolio to IQV.
Judging by the fact that IQVIA Holdings, Inc. (NYSE:IQV) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of fund managers that elected to cut their full holdings heading into Q4. Intriguingly, Daniel Sundheim’s D1 Capital Partners sold off the largest position of the “upper crust” of funds tracked by Insider Monkey, worth close to $218 million in stock, and Aaron Cowen’s Suvretta Capital Management was right behind this move, as the fund dumped about $122.6 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 4 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to IQVIA Holdings, Inc. (NYSE:IQV). We will take a look at Public Service Enterprise Group Incorporated (NYSE:PEG), HP Inc. (NYSE:HPQ), eBay Inc (NASDAQ:EBAY), and Atlassian Corporation Plc (NASDAQ:TEAM). All of these stocks’ market caps resemble IQV’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 48.25 hedge funds with bullish positions and the average amount invested in these stocks was $2451 million. That figure was $3823 million in IQV’s case. Atlassian Corporation Plc (NASDAQ:TEAM) is the most popular stock in this table. On the other hand Public Service Enterprise Group Incorporated (NYSE:PEG) is the least popular one with only 31 bullish hedge fund positions. Compared to these stocks IQVIA Holdings, Inc. (NYSE:IQV) 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 lost 1.0% in 2020 through April 20th and still beat the market by 11 percentage points. Unfortunately IQV wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on IQV were disappointed as the stock returned -17.5% during the three months of 2020 (through April 20th) 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.
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.