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In this article we will analyze whether IDEX Corporation (NYSE:IEX) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
IDEX Corporation (NYSE:IEX) investors should be aware of a decrease in hedge fund sentiment of late. IDEX Corporation (NYSE:IEX) was in 19 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 33. There were 29 hedge funds in our database with IEX positions at the end of the fourth quarter. Our calculations also showed that IEX isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
At the moment there are numerous gauges market participants can use to value publicly traded companies. A duo of the less known gauges are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can outpace the market by a solid amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Cliff Asness of AQR Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Now let's check out the new hedge fund action encompassing IDEX Corporation (NYSE:IEX).
Do Hedge Funds Think IEX Is A Good Stock To Buy Now?
At first quarter's end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -34% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards IEX over the last 23 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Impax Asset Management held the most valuable stake in IDEX Corporation (NYSE:IEX), which was worth $577.8 million at the end of the fourth quarter. On the second spot was Echo Street Capital Management which amassed $100.6 million worth of shares. GAMCO Investors, AQR Capital Management, and Montanaro 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 2.96% of its 13F portfolio. Montanaro Asset Management is also relatively very bullish on the stock, setting aside 2.76 percent of its 13F equity portfolio to IEX.
Because IDEX Corporation (NYSE:IEX) has witnessed declining sentiment from the smart money, we can see that there lies a certain "tier" of hedge funds that elected to cut their full holdings by the end of the first quarter. Intriguingly, Dmitry Balyasny's Balyasny Asset Management cut the biggest investment of the 750 funds watched by Insider Monkey, worth an estimated $20.4 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also cut its stock, about $8.6 million worth. These transactions are interesting, as total hedge fund interest fell by 10 funds by the end of the first quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as IDEX Corporation (NYSE:IEX) but similarly valued. These stocks are Pembina Pipeline Corp (NYSE:PBA), Boston Properties, Inc. (NYSE:BXP), Brookfield Infrastructure Partners L.P. (NYSE:BIP), Wix.Com Ltd (NASDAQ:WIX), Markel Corporation (NYSE:MKL), Check Point Software Technologies Ltd. (NASDAQ:CHKP), 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 PBA,15,74858,2 BXP,27,1058389,-3 BIP,12,47729,-2 WIX,40,1461252,3 MKL,30,654208,-6 CHKP,31,494577,5 DRE,20,279688,3 Average,25,581529,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $582 million. That figure was $843 million in IEX's case. Wix.Com Ltd (NASDAQ:WIX) is the most popular stock in this table. On the other hand Brookfield Infrastructure Partners L.P. (NYSE:BIP) is the least popular one with only 12 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. Our overall hedge fund sentiment score for IEX is 24.8. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately IEX wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); IEX investors were disappointed as the stock returned 8.8% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.