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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. Keeping this in mind, let's take a look at whether Integer Holdings Corporation (NYSE:ITGR) is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Integer Holdings Corporation (NYSE:ITGR) was in 20 hedge funds' portfolios at the end of December. ITGR has experienced an increase in support from the world's most elite money managers in recent months. There were 17 hedge funds in our database with ITGR positions at the end of the previous quarter. Our calculations also showed that ITGR 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 shareholders, hedge funds are seen as slow, old financial tools of years past. While there are over 8000 funds trading at the moment, Our researchers hone in on the crème de la crème of this group, approximately 850 funds. These investment experts shepherd most of the hedge fund industry's total capital, and by tracking their inimitable equity investments, Insider Monkey has identified numerous investment strategies that have historically outpaced the S&P 500 index. Insider Monkey's flagship short hedge fund strategy beat 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 .
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Noam Gottesman of GLG Partners[/caption]
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. 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. Keeping this in mind we're going to take a glance at the new hedge fund action encompassing Integer Holdings Corporation (NYSE:ITGR).
How have hedgies been trading Integer Holdings Corporation (NYSE:ITGR)?
At Q4's end, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ITGR over the last 18 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, Fisher Asset Management held the most valuable stake in Integer Holdings Corporation (NYSE:ITGR), which was worth $62.1 million at the end of the third quarter. On the second spot was GLG Partners which amassed $37.9 million worth of shares. Marshall Wace LLP, Tamarack Capital Management, and AQR Capital 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 Integer Holdings Corporation (NYSE:ITGR), around 3.05% of its 13F portfolio. Sio Capital is also relatively very bullish on the stock, dishing out 0.86 percent of its 13F equity portfolio to ITGR.
Consequently, key hedge funds have jumped into Integer Holdings Corporation (NYSE:ITGR) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the most valuable position in Integer Holdings Corporation (NYSE:ITGR). Balyasny Asset Management had $8.4 million invested in the company at the end of the quarter. John Overdeck and David Siegel's Two Sigma Advisors also initiated a $1.1 million position during the quarter. The following funds were also among the new ITGR investors: Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Matthew Hulsizer's PEAK6 Capital Management, and Thomas Bailard's Bailard Inc.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Integer Holdings Corporation (NYSE:ITGR) but similarly valued. These stocks are Black Stone Minerals LP (NYSE:BSM), Dana Incorporated (NYSE:DAN), Apergy Corporation (NYSE:APY), and HMS Holdings Corp. (NASDAQ:HMSY). This group of stocks' market caps match ITGR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BSM,4,3673,-3 DAN,27,277930,0 APY,17,119261,0 HMSY,25,137946,1 Average,18.25,134703,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $135 million. That figure was $178 million in ITGR's case. Dana Incorporated (NYSE:DAN) is the most popular stock in this table. On the other hand Black Stone Minerals LP (NYSE:BSM) is the least popular one with only 4 bullish hedge fund positions. Integer Holdings Corporation (NYSE:ITGR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately ITGR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on ITGR were disappointed as the stock returned -31.2% 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 many of these stocks already outperformed the market so far this year.
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.