Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Ingles Markets, Incorporated (NASDAQ:IMKTA) in this article.
Ingles Markets, Incorporated (NASDAQ:IMKTA) has seen an increase in enthusiasm from smart money in recent months. Our calculations also showed that IMKTA 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 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 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, 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 check out the key hedge fund action encompassing Ingles Markets, Incorporated (NASDAQ:IMKTA).
How are hedge funds trading Ingles Markets, Incorporated (NASDAQ:IMKTA)?
At Q2's end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from one quarter earlier. By comparison, 7 hedge funds held shares or bullish call options in IMKTA a year ago. With hedge funds' capital changing hands, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Mario Gabelli's GAMCO Investors has the largest position in Ingles Markets, Incorporated (NASDAQ:IMKTA), worth close to $32 million, corresponding to 0.2% of its total 13F portfolio. The second largest stake is held by AQR Capital Management, led by Cliff Asness, holding a $2.9 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other members of the smart money that are bullish comprise Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, John Overdeck and David Siegel's Two Sigma Advisors and Israel Englander's Millennium Management.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Ingles Markets, Incorporated (NASDAQ:IMKTA) headfirst. Renaissance Technologies initiated the biggest position in Ingles Markets, Incorporated (NASDAQ:IMKTA). Renaissance Technologies had $0.4 million invested in the company at the end of the quarter. David Harding's Winton Capital Management also initiated a $0.3 million position during the quarter. The following funds were also among the new IMKTA investors: Noam Gottesman's GLG Partners and Roger Ibbotson's Zebra Capital Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Ingles Markets, Incorporated (NASDAQ:IMKTA) but similarly valued. These stocks are Flushing Financial Corporation (NASDAQ:FFIC), Customers Bancorp Inc (NYSE:CUBI), KNOT Offshore Partners LP (NYSE:KNOP), and Kimball International Inc (NASDAQ:KBAL). This group of stocks' market values resemble IMKTA's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FFIC,8,44046,0 CUBI,12,45856,-1 KNOP,5,18106,1 KBAL,13,108992,1 Average,9.5,54250,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $46 million in IMKTA's case. Kimball International Inc (NASDAQ:KBAL) is the most popular stock in this table. On the other hand KNOT Offshore Partners LP (NYSE:KNOP) is the least popular one with only 5 bullish hedge fund positions. Ingles Markets, Incorporated (NASDAQ:IMKTA) is the most popular stock in this group together with KNOP. 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. Hedge funds were also right about betting on IMKTA as the stock returned 25.5% during the third quarter and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.