The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 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 March 31st, a week after the market trough. In this article we look at what those investors think of ICICI Bank Limited (NYSE:IBN).
ICICI Bank Limited (NYSE:IBN) investors should pay attention to a decrease in hedge fund sentiment in recent months. Our calculations also showed that IBN isn't among the 30 most popular stocks among hedge funds (click for Q1 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 58 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_30614" align="aligncenter" width="395"] Howard Marks of Oaktree Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a peek at the fresh hedge fund action surrounding ICICI Bank Limited (NYSE:IBN).
What have hedge funds been doing with ICICI Bank Limited (NYSE:IBN)?
At Q1's end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in IBN over the last 18 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, Driehaus Capital was the largest shareholder of ICICI Bank Limited (NYSE:IBN), with a stake worth $67.7 million reported as of the end of September. Trailing Driehaus Capital was Theleme Partners, which amassed a stake valued at $50.2 million. LMR Partners, Oaktree Capital Management, and Think Investments were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Dalton Investments allocated the biggest weight to ICICI Bank Limited (NYSE:IBN), around 13.03% of its 13F portfolio. Think Investments is also relatively very bullish on the stock, designating 11.94 percent of its 13F equity portfolio to IBN.
Judging by the fact that ICICI Bank Limited (NYSE:IBN) has experienced falling interest from the smart money, we can see that there was a specific group of funds who were dropping their entire stakes by the end of the first quarter. Interestingly, John Armitage's Egerton Capital Limited said goodbye to the largest stake of all the hedgies watched by Insider Monkey, valued at about $213.1 million in stock. Robert Pohly's fund, Samlyn Capital, also sold off its stock, about $171.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 5 funds by the end of the first quarter.
Let's now take a look at hedge fund activity in other stocks similar to ICICI Bank Limited (NYSE:IBN). These stocks are Constellation Brands, Inc. (NYSE:STZ), Telefonaktiebolaget LM Ericsson (publ) (NASDAQ:ERIC), Lloyds Banking Group PLC (NYSE:LYG), and Consolidated Edison, Inc. (NYSE:ED). This group of stocks' market valuations resemble IBN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STZ,50,1504770,-2 ERIC,20,366624,2 LYG,9,37400,4 ED,25,844776,-1 Average,26,688393,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $688 million. That figure was $379 million in IBN's case. Constellation Brands, Inc. (NYSE:STZ) is the most popular stock in this table. On the other hand Lloyds Banking Group PLC (NYSE:LYG) is the least popular one with only 9 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. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately IBN wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); IBN investors were disappointed as the stock returned 10.2% during the second 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 in 2020.
Disclosure: None. This article was originally published at Insider Monkey.