"Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn't by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today's darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn't attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal," said Vilas Fund in its Q1 investor letter. We aren't sure whether 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 Intelligent Systems Corporation (NYSE:INS).
Intelligent Systems Corporation (NYSE:INS) has seen an increase in enthusiasm from smart money in recent months. INS was in 7 hedge funds' portfolios at the end of the second quarter of 2019. There were 5 hedge funds in our database with INS positions at the end of the previous quarter. Our calculations also showed that INS isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Now we're going to check out the fresh hedge fund action surrounding Intelligent Systems Corporation (NYSE:INS).
How are hedge funds trading Intelligent Systems Corporation (NYSE:INS)?
At Q2's end, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 40% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards INS over the last 16 quarters. With hedgies' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Among these funds, Wallace R. Weitz & Co. held the most valuable stake in Intelligent Systems Corporation (NYSE:INS), which was worth $65.4 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $3 million worth of shares. Moreover, Arrowstreet Capital, Millennium Management, and Navellier & Associates were also bullish on Intelligent Systems Corporation (NYSE:INS), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, specific money managers were breaking ground themselves. Navellier & Associates, managed by Louis Navellier, initiated the largest position in Intelligent Systems Corporation (NYSE:INS). Navellier & Associates had $0.2 million invested in the company at the end of the quarter. David Harding's Winton Capital Management also initiated a $0.2 million position during the quarter. The only other fund with a new position in the stock is Chuck Royce's Royce & Associates.
Let's now take a look at hedge fund activity in other stocks similar to Intelligent Systems Corporation (NYSE:INS). We will take a look at Xenon Pharmaceuticals Inc (NASDAQ:XENE), Parke Bancorp, Inc. (NASDAQ:PKBK), Landcadia Holdings II, Inc. (NASDAQ:LCAHU), and Hooker Furniture Corporation (NASDAQ:HOFT). All of these stocks' market caps match INS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position XENE,17,112726,-2 PKBK,2,13667,-1 LCAHU,18,107377,18 HOFT,6,39559,-5 Average,10.75,68332,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $70 million in INS's case. Landcadia Holdings II, Inc. (NASDAQ:LCAHU) is the most popular stock in this table. On the other hand Parke Bancorp, Inc. (NASDAQ:PKBK) is the least popular one with only 2 bullish hedge fund positions. Intelligent Systems Corporation (NYSE:INS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on INS as the stock returned 44.3% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.