Hedge Funds Are Warming Up To Iron Mountain Incorporated (IRM)
The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Iron Mountain Incorporated (NYSE:IRM) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Iron Mountain Incorporated (NYSE:IRM) a buy right now? Money managers were buying. The number of long hedge fund positions advanced by 3 recently. Iron Mountain Incorporated (NYSE:IRM) was in 22 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that IRM isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).
Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (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 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Joel Greenblatt of Gotham Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Keeping this in mind we're going to take a glance at the fresh hedge fund action regarding Iron Mountain Incorporated (NYSE:IRM).
How have hedgies been trading Iron Mountain Incorporated (NYSE:IRM)?
At the end of June, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in IRM a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Iron Mountain Incorporated (NYSE:IRM) was held by Greenhouse Funds, which reported holding $27.8 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $22.3 million position. Other investors bullish on the company included Two Sigma Advisors, Adage Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Southport Management allocated the biggest weight to Iron Mountain Incorporated (NYSE:IRM), around 5.85% of its 13F portfolio. Greenhouse Funds is also relatively very bullish on the stock, dishing out 4.16 percent of its 13F equity portfolio to IRM.
As aggregate interest increased, key hedge funds have jumped into Iron Mountain Incorporated (NYSE:IRM) headfirst. Greenhouse Funds, managed by Joe Milano, assembled the biggest position in Iron Mountain Incorporated (NYSE:IRM). Greenhouse Funds had $27.8 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also made a $4.3 million investment in the stock during the quarter. The following funds were also among the new IRM investors: Jonathan Dawson's Southport Management, Joel Greenblatt's Gotham Asset Management, and Paul Tudor Jones's Tudor Investment Corp.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Iron Mountain Incorporated (NYSE:IRM) but similarly valued. We will take a look at Textron Inc. (NYSE:TXT), The Scotts Miracle-Gro Company (NYSE:SMG), Molson Coors Beverage Company (NYSE:TAP), Gaming and Leisure Properties Inc (NASDAQ:GLPI), Melco Resorts & Entertainment Limited (NASDAQ:MLCO), Ally Financial Inc (NYSE:ALLY), and Credit Acceptance Corp. (NASDAQ:CACC). This group of stocks' market valuations match IRM's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TXT,24,267696,2 SMG,30,307814,2 TAP,36,274462,2 GLPI,35,498974,0 MLCO,32,610443,4 ALLY,54,1635686,9 CACC,23,985846,1 Average,33.4,654417,2.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.4 hedge funds with bullish positions and the average amount invested in these stocks was $654 million. That figure was $65 million in IRM's case. Ally Financial Inc (NYSE:ALLY) is the most popular stock in this table. On the other hand Credit Acceptance Corp. (NASDAQ:CACC) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Iron Mountain Incorporated (NYSE:IRM) is even less popular than CACC. Our overall hedge fund sentiment score for IRM is 36.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds dodged a bullet by taking a bearish stance towards IRM. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September but managed to beat the market by 19.3 percentage points. Unfortunately IRM wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); IRM investors were disappointed as the stock returned 4.8% in 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
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