There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don't cover. Because of Carl Icahn and other elite funds' exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze IQVIA Holdings, Inc. (NYSE:IQV).
IQVIA Holdings, Inc. (NYSE:IQV) has experienced an increase in support from the world's most elite money managers of late. IQV was in 67 hedge funds' portfolios at the end of the second quarter of 2019. There were 64 hedge funds in our database with IQV holdings at the end of the previous quarter. Our calculations also showed that IQV 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.
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 40 percentage points since May 2014 through May 30, 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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a glance at the fresh hedge fund action encompassing IQVIA Holdings, Inc. (NYSE:IQV).
Hedge fund activity in IQVIA Holdings, Inc. (NYSE:IQV)
At Q2's end, a total of 67 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the previous quarter. On the other hand, there were a total of 46 hedge funds with a bullish position in IQV a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Lone Pine Capital was the largest shareholder of IQVIA Holdings, Inc. (NYSE:IQV), with a stake worth $995.3 million reported as of the end of March. Trailing Lone Pine Capital was Glenview Capital, which amassed a stake valued at $623 million. AQR Capital Management, Farallon Capital, and D E Shaw were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, specific money managers were leading the bulls' herd. Egerton Capital Limited, managed by John Armitage, assembled the biggest position in IQVIA Holdings, Inc. (NYSE:IQV). Egerton Capital Limited had $224.1 million invested in the company at the end of the quarter. Richard Chilton's Chilton Investment Company also initiated a $71.3 million position during the quarter. The other funds with new positions in the stock are David Fiszel's Honeycomb Asset Management, Joe DiMenna's ZWEIG DIMENNA PARTNERS, and Per Johanssoná's Bodenholm Capital.
Let's now review hedge fund activity in other stocks similar to IQVIA Holdings, Inc. (NYSE:IQV). We will take a look at HP Inc. (NYSE:HPQ), Canadian Natural Resources Limited (NYSE:CNQ), Newmont Mining Corp (NYSE:NEM), and Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC). This group of stocks' market valuations are closest to IQV's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HPQ,32,870489,-3 CNQ,24,424540,-5 NEM,41,777802,6 ERIC,19,415250,-1 Average,29,622020,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $622 million. That figure was $5893 million in IQV's case. Newmont Mining Corp (NYSE:NEM) is the most popular stock in this table. On the other hand Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks IQVIA Holdings, Inc. (NYSE:IQV) is more popular among hedge funds. 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. Unfortunately IQV wasn't nearly as popular as these 20 stocks and hedge funds that were betting on IQV were disappointed as the stock returned -7.2% during the third 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 many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.