- Oops!Something went wrong.Please try again later.
Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards IDEX Corporation (NYSE:IEX) to find out whether there were any major changes in hedge funds' views.
Is IEX stock a buy? The smart money was becoming hopeful. The number of long hedge fund positions increased by 3 in recent months. IDEX Corporation (NYSE:IEX) was in 29 hedge funds' portfolios at the end of December. The all time high for this statistic is 33. Our calculations also showed that IEX isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 26 hedge funds in our database with IEX positions at the end of the third quarter.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
Peter Algert of Algert Global
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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. With all of this in mind let's check out the new hedge fund action regarding IDEX Corporation (NYSE:IEX).
Do Hedge Funds Think IEX Is A Good Stock To Buy Now?
At Q4's end, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 12% from one quarter earlier. On the other hand, there were a total of 23 hedge funds with a bullish position in IEX a year ago. With the smart money's sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Impax Asset Management held the most valuable stake in IDEX Corporation (NYSE:IEX), which was worth $490.8 million at the end of the fourth quarter. On the second spot was Echo Street Capital Management which amassed $58.9 million worth of shares. GAMCO Investors, Millennium Management, and AQR Capital Management 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 Impax Asset Management allocated the biggest weight to IDEX Corporation (NYSE:IEX), around 3.12% of its 13F portfolio. Wallace R. Weitz & Co. is also relatively very bullish on the stock, designating 0.59 percent of its 13F equity portfolio to IEX.
As one would reasonably expect, some big names have jumped into IDEX Corporation (NYSE:IEX) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most outsized position in IDEX Corporation (NYSE:IEX). Balyasny Asset Management had $20.4 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $2.4 million position during the quarter. The other funds with new positions in the stock are Matthew Hulsizer's PEAK6 Capital Management, Peter Algert's Algert Global, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as IDEX Corporation (NYSE:IEX) but similarly valued. We will take a look at Extra Space Storage, Inc. (NYSE:EXR), Leidos Holdings Inc (NYSE:LDOS), Pool Corporation (NASDAQ:POOL), Telefonica Brasil SA (NYSE:VIV), FMC Corporation (NYSE:FMC), Fair Isaac Corporation (NYSE:FICO), and Duke Realty Corporation (NYSE:DRE). All of these stocks' market caps are closest to IEX's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EXR,29,298792,2 LDOS,14,92699,-11 POOL,33,870840,-3 VIV,8,99404,-5 FMC,45,571684,4 FICO,38,1404904,-5 DRE,17,203716,-5 Average,26.3,506006,-3.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.3 hedge funds with bullish positions and the average amount invested in these stocks was $506 million. That figure was $738 million in IEX's case. FMC Corporation (NYSE:FMC) is the most popular stock in this table. On the other hand Telefonica Brasil SA (NYSE:VIV) is the least popular one with only 8 bullish hedge fund positions. IDEX Corporation (NYSE:IEX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IEX is 62.7. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on IEX, though not to the same extent, as the stock returned 9.8% since Q4 (through April 12th) and outperformed the market as well.
Get real-time email alerts: Follow Idex Corp (NYSE:IEX)
Disclosure: None. This article was originally published at Insider Monkey.