We at Insider Monkey have gone over 738 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article, we look at what those funds think of Innophos Holdings, Inc. (NASDAQ:IPHS) based on that data.
Innophos Holdings, Inc. (NASDAQ:IPHS) shareholders have witnessed a decrease in support from the world's most elite money managers of late. Our calculations also showed that IPHS isn't among the 30 most popular stocks among hedge funds.
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 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.
We're going to take a look at the new hedge fund action encompassing Innophos Holdings, Inc. (NASDAQ:IPHS).
What does smart money think about Innophos Holdings, Inc. (NASDAQ:IPHS)?
At Q1's end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from the fourth quarter of 2018. By comparison, 13 hedge funds held shares or bullish call options in IPHS a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Innophos Holdings, Inc. (NASDAQ:IPHS), with a stake worth $22.8 million reported as of the end of March. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $5.6 million. Millennium Management, D E Shaw, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Innophos Holdings, Inc. (NASDAQ:IPHS) has witnessed declining sentiment from the entirety of the hedge funds we track, it's safe to say that there exists a select few fund managers who were dropping their entire stakes in the third quarter. It's worth mentioning that Paul Marshall and Ian Wace's Marshall Wace LLP sold off the largest stake of the "upper crust" of funds tracked by Insider Monkey, worth close to $1.3 million in stock. Peter Muller's fund, PDT Partners, also dumped its stock, about $0.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Innophos Holdings, Inc. (NASDAQ:IPHS) but similarly valued. These stocks are Speedway Motorsports, Inc. (NYSE:TRK), Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX), Costamare Inc (NYSE:CMRE), and Dorchester Minerals LP (NASDAQ:DMLP). This group of stocks' market valuations resemble IPHS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TRK,9,10429,-2 LXRX,12,8733,1 CMRE,9,16990,-1 DMLP,6,34031,0 Average,9,17546,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $18 million. That figure was $45 million in IPHS's case. Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) is the most popular stock in this table. On the other hand Dorchester Minerals LP (NASDAQ:DMLP) is the least popular one with only 6 bullish hedge fund positions. Innophos Holdings, Inc. (NASDAQ:IPHS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately IPHS wasn't nearly as popular as these 20 stocks and hedge funds that were betting on IPHS were disappointed as the stock returned -7.3% during the same period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.