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 third 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 IDEX Corporation (NYSE:IEX) based on that data.
Is IDEX Corporation (NYSE:IEX) a healthy stock for your portfolio? Money managers are turning bullish. The number of long hedge fund positions went up by 4 recently. Our calculations also showed that IEX isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to 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 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
[caption id="attachment_375529" align="aligncenter" width="450"] Mario Gabelli of GAMCO Investors[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to analyze the key hedge fund action surrounding IDEX Corporation (NYSE:IEX).
What does smart money think about IDEX Corporation (NYSE:IEX)?
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 27% from the second quarter of 2019. On the other hand, there were a total of 23 hedge funds with a bullish position in IEX a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Impax Asset Management was the largest shareholder of IDEX Corporation (NYSE:IEX), with a stake worth $205.1 million reported as of the end of September. Trailing Impax Asset Management was Millennium Management, which amassed a stake valued at $96.5 million. GAMCO Investors, AQR Capital Management, and Balyasny 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 Impax Asset Management allocated the biggest weight to IDEX Corporation (NYSE:IEX), around 2.67% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, designating 0.49 percent of its 13F equity portfolio to IEX.
As one would reasonably expect, key hedge funds have been driving this bullishness. Adage Capital Management, managed by Phill Gross and Robert Atchinson, initiated the most valuable position in IDEX Corporation (NYSE:IEX). Adage Capital Management had $7.6 million invested in the company at the end of the quarter. Matthew Tewksbury's Stevens Capital Management also made a $2.6 million investment in the stock during the quarter. The other funds with brand new IEX positions are Joel Greenblatt's Gotham Asset Management, Lee Ainslie's Maverick Capital, and Michael Gelband's ExodusPoint Capital.
Let's check out hedge fund activity in other stocks similar to IDEX Corporation (NYSE:IEX). We will take a look at Jacobs Engineering Group Inc (NYSE:JEC), MarketAxess Holdings Inc. (NASDAQ:MKTX), Leidos Holdings Inc (NYSE:LDOS), and Duke Realty Corporation (NYSE:DRE). This group of stocks' market valuations match IEX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JEC,29,1023270,-3 MKTX,24,470073,6 LDOS,24,439384,1 DRE,16,170834,-7 Average,23.25,525890,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.25 hedge funds with bullish positions and the average amount invested in these stocks was $526 million. That figure was $454 million in IEX's case. Jacobs Engineering Group Inc (NYSE:JEC) is the most popular stock in this table. On the other hand Duke Realty Corporation (NYSE:DRE) is the least popular one with only 16 bullish hedge fund positions. IDEX Corporation (NYSE:IEX) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately IEX wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); IEX investors were disappointed as the stock returned -0.4% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.