We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Icahn Enterprises LP (NASDAQ:IEP).
Hedge fund interest in Icahn Enterprises LP (NASDAQ:IEP) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare IEP to other stocks including Slack Technologies Inc (NYSE:WORK), Gartner Inc (NYSE:IT), and CBOE Holdings, Inc (NASDAQ:CBOE) to get a better sense of its popularity. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are a large number of metrics stock traders use to grade their holdings. A pair of the most useful metrics are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the best investment managers can outclass the market by a very impressive margin (see the details here).
[caption id="attachment_25910" align="aligncenter" width="467"] Carl Icahn of Icahn Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. Now let's analyze the new hedge fund action encompassing Icahn Enterprises LP (NASDAQ:IEP).
How are hedge funds trading Icahn Enterprises LP (NASDAQ:IEP)?
At Q3's end, a total of 5 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in IEP over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Icahn Enterprises LP (NASDAQ:IEP) was held by Icahn Capital, which reported holding $12252.4 million worth of stock at the end of September. It was followed by Horizon Asset Management with a $102.7 million position. Other investors bullish on the company included Citadel Investment Group, Renaissance Technologies, and Marshall Wace. In terms of the portfolio weights assigned to each position Icahn Capital allocated the biggest weight to Icahn Enterprises LP (NASDAQ:IEP), around 47.69% of its 13F portfolio. Horizon Asset Management is also relatively very bullish on the stock, dishing out 3.09 percent of its 13F equity portfolio to IEP.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: McKinley Capital Management. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Marshall Wace).
Let's check out hedge fund activity in other stocks similar to Icahn Enterprises LP (NASDAQ:IEP). These stocks are Slack Technologies Inc (NYSE:WORK), Gartner Inc (NYSE:IT), Cboe Global Markets, Inc. (BATS:CBOE), and Agnico Eagle Mines Limited (NYSE:AEM). This group of stocks' market caps resemble IEP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WORK,27,326449,-10 IT,19,659624,2 CBOE,23,1076442,-1 AEM,30,382337,4 Average,24.75,611213,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.75 hedge funds with bullish positions and the average amount invested in these stocks was $611 million. That figure was $12358 million in IEP's case. Agnico Eagle Mines Limited (NYSE:AEM) is the most popular stock in this table. On the other hand Gartner Inc (NYSE:IT) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Icahn Enterprises LP (NASDAQ:IEP) is even less popular than IT. Hedge funds dodged a bullet by taking a bearish stance towards IEP. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately IEP wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); IEP investors were disappointed as the stock returned 1.1% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.