Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients' money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
ICICI Bank Limited (NYSE:IBN) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 26 hedge funds' portfolios at the end of March. At the end of this article we will also compare IBN to other stocks including Fidelity National Information Services Inc. (NYSE:FIS), The Travelers Companies Inc (NYSE:TRV), and Humana Inc (NYSE:HUM) to get a better sense of its popularity.
Why do we pay any attention at all to hedge fund sentiment? 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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a peek at the new hedge fund action surrounding ICICI Bank Limited (NYSE:IBN).
What have hedge funds been doing with ICICI Bank Limited (NYSE:IBN)?
Heading into the second quarter of 2019, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards IBN over the last 15 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in ICICI Bank Limited (NYSE:IBN) was held by Oaktree Capital Management, which reported holding $118.2 million worth of stock at the end of March. It was followed by LMR Partners with a $89 million position. Other investors bullish on the company included Driehaus Capital, Samlyn Capital, and Two Creeks Capital Management.
Because ICICI Bank Limited (NYSE:IBN) has faced bearish sentiment from the entirety of the hedge funds we track, it's easy to see that there is a sect of funds who were dropping their entire stakes heading into Q3. Interestingly, Rob Citrone's Discovery Capital Management sold off the biggest stake of the 700 funds watched by Insider Monkey, worth an estimated $68.6 million in stock, and D. E. Shaw's D E Shaw was right behind this move, as the fund said goodbye to about $64.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks similar to ICICI Bank Limited (NYSE:IBN). These stocks are Fidelity National Information Services Inc. (NYSE:FIS), The Travelers Companies Inc (NYSE:TRV), Humana Inc (NYSE:HUM), and Carnival plc (NYSE:CUK). All of these stocks' market caps are similar to IBN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FIS,55,3479314,18 TRV,29,1262157,0 HUM,42,3053077,-4 CUK,8,70177,0 Average,33.5,1966181,3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.5 hedge funds with bullish positions and the average amount invested in these stocks was $1966 million. That figure was $744 million in IBN's case. Fidelity National Information Services Inc. (NYSE:FIS) is the most popular stock in this table. On the other hand Carnival plc (NYSE:CUK) is the least popular one with only 8 bullish hedge fund positions. ICICI Bank Limited (NYSE:IBN) 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. A small number of hedge funds were also right about betting on IBN as the stock returned 5.1% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.