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In this article we are going to use hedge fund sentiment as a tool and determine whether i3 Verticals, Inc. (NASDAQ:IIIV) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
i3 Verticals, Inc. (NASDAQ:IIIV) has seen an increase in enthusiasm from smart money lately. i3 Verticals, Inc. (NASDAQ:IIIV) was in 18 hedge funds' portfolios at the end of September. The all time high for this statistic is 13. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 12 hedge funds in our database with IIIV holdings at the end of June. Our calculations also showed that IIIV isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
To the average investor there are several gauges shareholders employ to size up publicly traded companies. Some of the less known gauges are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best money managers can outclass the S&P 500 by a solid margin (see the details here).
Richard Driehaus of Driehaus Capital
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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Keeping this in mind we're going to take a look at the latest hedge fund action surrounding i3 Verticals, Inc. (NASDAQ:IIIV).
Do Hedge Funds Think IIIV Is A Good Stock To Buy Now?
At Q3's end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the previous quarter. The graph below displays the number of hedge funds with bullish position in IIIV over the last 21 quarters. With the smart money's capital changing hands, there exists a select group of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in i3 Verticals, Inc. (NASDAQ:IIIV) was held by Millennium Management, which reported holding $20.9 million worth of stock at the end of September. It was followed by Harbert Management with a $14.2 million position. Other investors bullish on the company included Driehaus Capital, Crosslink Capital, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Harbert Management allocated the biggest weight to i3 Verticals, Inc. (NASDAQ:IIIV), around 17.33% of its 13F portfolio. Crosslink Capital is also relatively very bullish on the stock, earmarking 1.66 percent of its 13F equity portfolio to IIIV.
As one would reasonably expect, specific money managers have jumped into i3 Verticals, Inc. (NASDAQ:IIIV) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the biggest position in i3 Verticals, Inc. (NASDAQ:IIIV). Marshall Wace LLP had $3.6 million invested in the company at the end of the quarter. Benjamin A. Smith's Laurion Capital Management also initiated a $1.3 million position during the quarter. The following funds were also among the new IIIV investors: Matthew Halbower's Pentwater Capital Management, Michael Gelband's ExodusPoint Capital, and Paul Tudor Jones's Tudor Investment Corp.
Let's go over hedge fund activity in other stocks similar to i3 Verticals, Inc. (NASDAQ:IIIV). We will take a look at Newmark Group, Inc. (NASDAQ:NMRK), Triumph Bancorp Inc (NASDAQ:TBK), Puxin Limited (NYSE:NEW), Forterra, Inc. (NASDAQ:FRTA), Stock Yards Bancorp, Inc. (NASDAQ:SYBT), Raven Industries, Inc. (NASDAQ:RAVN), and Ingles Markets, Incorporated (NASDAQ:IMKTA). This group of stocks' market caps are closest to IIIV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NMRK,19,88996,-5 TBK,5,33554,-2 NEW,7,10525,-1 FRTA,27,128985,14 SYBT,9,10163,1 RAVN,16,79410,3 IMKTA,16,71020,0 Average,14.1,60379,1.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $69 million in IIIV's case. Forterra, Inc. (NASDAQ:FRTA) is the most popular stock in this table. On the other hand Triumph Bancorp Inc (NASDAQ:TBK) is the least popular one with only 5 bullish hedge fund positions. i3 Verticals, Inc. (NASDAQ:IIIV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IIIV is 69.5. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on IIIV as the stock returned 12.4% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.