In this article we will take a look at whether hedge funds think Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Hedge fund interest in Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that IBA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare IBA to other stocks including Accolade, Inc. (NASDAQ:ACCD), Independent Bank Group Inc (NASDAQ:IBTX), and Badger Meter, Inc. (NYSE:BMI) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. 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.Keeping this in mind let’s review the recent hedge fund action regarding Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA).
Hedge fund activity in Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA)
At third quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 4 hedge funds held shares or bullish call options in IBA a year ago. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA), with a stake worth $25.7 million reported as of the end of September. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $4 million. Sprott Asset Management was 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 Sprott Asset Management allocated the biggest weight to Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA), around 0.11% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.04 percent of its 13F equity portfolio to IBA.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) but similarly valued. These stocks are Accolade, Inc. (NASDAQ:ACCD), Independent Bank Group Inc (NASDAQ:IBTX), Badger Meter, Inc. (NYSE:BMI), Chimera Investment Corporation (NYSE:CIM), Pacific Premier Bancorp, Inc. (NASDAQ:PPBI), Prospect Capital Corporation (NASDAQ:PSEC), and Pacific Biosciences of California (NASDAQ:PACB). This group of stocks’ market valuations resemble IBA’s market valuation.
|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 14 hedge funds with bullish positions and the average amount invested in these stocks was $120 million. That figure was $32 million in IBA’s case. Pacific Biosciences of California (NASDAQ:PACB) is the most popular stock in this table. On the other hand Prospect Capital Corporation (NASDAQ:PSEC) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) is even less popular than PSEC. Our overall hedge fund sentiment score for IBA is 27.5. 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. Hedge funds dodged a bullet by taking a bearish stance towards IBA. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd but managed to beat the market again by 15.4 percentage points. Unfortunately IBA wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); IBA investors were disappointed as the stock returned 5.6% since the end of the third quarter (through 11/23) 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 so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.