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ICON Public Limited Company (ICLR): Were Hedge Funds Right About This Stock?

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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. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded ICON Public Limited Company (NASDAQ:ICLR) and determine whether the smart money was really smart about this stock.

ICON Public Limited Company (NASDAQ:ICLR) has experienced an increase in activity from the world's largest hedge funds in recent months. ICLR was in 21 hedge funds' portfolios at the end of March. There were 19 hedge funds in our database with ICLR holdings at the end of the previous quarter. Our calculations also showed that ICLR 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.

Ken Griffin
Ken Griffin

Ken Griffin of Citadel Investment Group

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind we're going to take a gander at the latest hedge fund action regarding ICON Public Limited Company (NASDAQ:ICLR).

Hedge fund activity in ICON Public Limited Company (NASDAQ:ICLR)

Heading into the second quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the previous quarter. On the other hand, there were a total of 27 hedge funds with a bullish position in ICLR a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in ICON Public Limited Company (NASDAQ:ICLR) was held by Renaissance Technologies, which reported holding $340.2 million worth of stock at the end of September. It was followed by Polar Capital with a $32.3 million position. Other investors bullish on the company included D E Shaw, Citadel Investment Group, and McKinley Capital Management. In terms of the portfolio weights assigned to each position Intrepid Capital Management allocated the biggest weight to ICON Public Limited Company (NASDAQ:ICLR), around 1.45% of its 13F portfolio. McKinley Capital Management is also relatively very bullish on the stock, setting aside 1.08 percent of its 13F equity portfolio to ICLR.

As aggregate interest increased, key money managers have been driving this bullishness. Intrepid Capital Management, managed by Mark Travis, established the most outsized position in ICON Public Limited Company (NASDAQ:ICLR). Intrepid Capital Management had $2.1 million invested in the company at the end of the quarter. Chen Tianqiao's Shanda Asset Management also made a $2 million investment in the stock during the quarter. The other funds with brand new ICLR positions are Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, Peter Algert and Kevin Coldiron's Algert Coldiron Investors, and Hoon Kim's Quantinno Capital.

Let's now review hedge fund activity in other stocks similar to ICON Public Limited Company (NASDAQ:ICLR). We will take a look at Ares Management Corp (NYSE:ARES), Bio-Techne Corporation (NASDAQ:TECH), Zendesk Inc (NYSE:ZEN), and Annaly Capital Management, Inc. (NYSE:NLY). This group of stocks' market values are similar to ICLR's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ARES,16,186111,-2 TECH,26,313491,0 ZEN,55,1262714,-6 NLY,27,224564,6 Average,31,496720,-0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $497 million. That figure was $478 million in ICLR's case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand Ares Management Corp (NYSE:ARES) is the least popular one with only 16 bullish hedge fund positions. ICON Public Limited Company (NASDAQ:ICLR) is not the least popular stock in this group but hedge fund interest is still below average. 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 18.6% in 2020 through July 27th and still beat the market by 17.1 percentage points. A small number of hedge funds were also right about betting on ICLR as the stock returned 37.1% since the end of March and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.

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