The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Itron, Inc. (NASDAQ:ITRI) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Itron, Inc. (NASDAQ:ITRI) investors should pay attention to an increase in enthusiasm from smart money lately. ITRI was in 23 hedge funds' portfolios at the end of the third quarter of 2019. There were 22 hedge funds in our database with ITRI positions at the end of the previous quarter. Our calculations also showed that ITRI 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_189632" align="aligncenter" width="600"] David Harding of Winton Capital Management[/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 take a peek at the new hedge fund action encompassing Itron, Inc. (NASDAQ:ITRI).
How have hedgies been trading Itron, Inc. (NASDAQ:ITRI)?
Heading into the fourth quarter of 2019, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ITRI over the last 17 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Impax Asset Management held the most valuable stake in Itron, Inc. (NASDAQ:ITRI), which was worth $163.2 million at the end of the third quarter. On the second spot was Scopia Capital which amassed $142 million worth of shares. Cardinal Capital, Renaissance Technologies, and Arrowstreet Capital 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 Scopia Capital allocated the biggest weight to Itron, Inc. (NASDAQ:ITRI), around 8.31% of its 13F portfolio. Impax Asset Management is also relatively very bullish on the stock, setting aside 2.13 percent of its 13F equity portfolio to ITRI.
Consequently, specific money managers were breaking ground themselves. Winton Capital Management, managed by David Harding, created the most outsized position in Itron, Inc. (NASDAQ:ITRI). Winton Capital Management had $1.4 million invested in the company at the end of the quarter. Benjamin A. Smith's Laurion Capital Management also made a $0.9 million investment in the stock during the quarter. The following funds were also among the new ITRI investors: Peter Algert and Kevin Coldiron's Algert Coldiron Investors, Cliff Asness's AQR Capital Management, and Brandon Haley's Holocene Advisors.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Itron, Inc. (NASDAQ:ITRI) but similarly valued. These stocks are Taro Pharmaceutical Industries Ltd. (NYSE:TARO), Albany International Corp. (NYSE:AIN), Sensient Technologies Corporation (NYSE:SXT), and LiveRamp Holdings, Inc. (NYSE:RAMP). All of these stocks' market caps resemble ITRI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TARO,10,77317,0 AIN,12,82477,-3 SXT,15,69055,3 RAMP,17,199071,-5 Average,13.5,106980,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $107 million. That figure was $436 million in ITRI's case. LiveRamp Holdings, Inc. (NYSE:RAMP) is the most popular stock in this table. On the other hand Taro Pharmaceutical Industries Ltd. (NYSE:TARO) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Itron, Inc. (NASDAQ:ITRI) is more popular among hedge funds. 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. Hedge funds were also right about betting on ITRI, though not to the same extent, as the stock returned 8.3% during the fourth quarter (through the end of November) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.