"Market conditions are changing. The continued rise in interest rates suggests we are in the early stages of a bond bear market, which could intensify as central banks withdraw liquidity. The receding tide of liquidity will start to reveal more rocks beyond what has been exposed in emerging markets so far, and the value of a value discipline will be in avoiding the biggest capital-destroying rocks. If a rock emerges on the crowded shore of U.S. momentum, it could result in a major liquidity challenge, as momentum is often most intense on the downside as a crowded trade reverses. So investors are facing a large potential trade-off right now: continue to bet on the current dominance of momentum and the S&P 500, or bet on change and take an active value bet in names with attractive value and optionality, but with negative momentum," said Clearbridge Investments in its market commentary. We aren't sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards ICON Public Limited Company (NASDAQ:ICLR).
ICON Public Limited Company (NASDAQ:ICLR) shareholders have witnessed an increase in hedge fund sentiment lately. Our calculations also showed that ICLR isn't among the 30 most popular stocks among hedge funds.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's check out the key hedge fund action encompassing ICON Public Limited Company (NASDAQ:ICLR).
How are hedge funds trading ICON Public Limited Company (NASDAQ:ICLR)?
At the end of the fourth quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards ICLR over the last 14 quarters. With the smart money's capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Jim Simons's Renaissance Technologies has the largest position in ICON Public Limited Company (NASDAQ:ICLR), worth close to $244.9 million, amounting to 0.3% of its total 13F portfolio. The second most bullish fund manager is Millennium Management, led by Israel Englander, holding a $71.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism comprise Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Brian Ashford-Russell and Tim Woolley's Polar Capital and Ryan Caldwell's Chiron Investment Management.
Now, key money managers have been driving this bullishness. Chiron Investment Management, managed by Ryan Caldwell, established the most outsized position in ICON Public Limited Company (NASDAQ:ICLR). Chiron Investment Management had $22.1 million invested in the company at the end of the quarter. Matthew Tewksbury's Stevens Capital Management also initiated a $0.8 million position during the quarter. The other funds with new positions in the stock are Minhua Zhang's Weld Capital Management, Matthew Hulsizer's PEAK6 Capital Management, and Ronald Hua's Qtron Investments.
Let's go over hedge fund activity in other stocks similar to ICON Public Limited Company (NASDAQ:ICLR). These stocks are MGM Growth Properties LLC (NYSE:MGP), Liberty Media Corporation (NASDAQ:FWONA), KT Corporation (NYSE:KT), and Erie Indemnity Company (NASDAQ:ERIE). This group of stocks' market valuations are closest to ICLR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MGP,12,151955,-3 FWONA,19,271792,-2 KT,16,271168,7 ERIE,11,71198,-3 Average,14.5,191528,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $192 million. That figure was $462 million in ICLR's case. Liberty Media Corporation (NASDAQ:FWONA) is the most popular stock in this table. On the other hand Erie Indemnity Company (NASDAQ:ERIE) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks ICON Public Limited Company (NASDAQ:ICLR) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks among hedge funds returned 21.3% through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Unfortunately ICLR wasn't in this group. Hedge funds that bet on ICLR were disappointed as the stock returned 7.9% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 12 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.