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At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards iMedia Brands, Inc. (NASDAQ:IMBI).
Is iMedia Brands, Inc. (NASDAQ:IMBI) a good stock to buy? The smart money was taking a bullish view. The number of long hedge fund bets inched up by 4 recently. iMedia Brands, Inc. (NASDAQ:IMBI) was in 5 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 16. Our calculations also showed that IMBI 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.
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 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 66 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Peter Algert of Algert Global
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. With all of this in mind let's check out the recent hedge fund action encompassing iMedia Brands, Inc. (NASDAQ:IMBI).
What have hedge funds been doing with iMedia Brands, Inc. (NASDAQ:IMBI)?
At the end of September, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 400% from one quarter earlier. On the other hand, there were a total of 4 hedge funds with a bullish position in IMBI a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of iMedia Brands, Inc. (NASDAQ:IMBI), with a stake worth $2.8 million reported as of the end of September. Trailing Renaissance Technologies was Two Sigma Advisors, which amassed a stake valued at $0.6 million. Granite Point Capital, Engineers Gate Manager, and Algert Global 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 Algert Global allocated the biggest weight to iMedia Brands, Inc. (NASDAQ:IMBI), around 0.02% of its 13F portfolio. Granite Point Capital is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to IMBI.
Consequently, specific money managers were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the most outsized position in iMedia Brands, Inc. (NASDAQ:IMBI). Two Sigma Advisors had $0.6 million invested in the company at the end of the quarter. Warren Lammert's Granite Point Capital also made a $0.1 million investment in the stock during the quarter. The following funds were also among the new IMBI investors: Greg Eisner's Engineers Gate Manager and Peter Algert's Algert Global.
Let's now take a look at hedge fund activity in other stocks similar to iMedia Brands, Inc. (NASDAQ:IMBI). We will take a look at Computer Task Group, Inc. (NASDAQ:CTG), Core Molding Technologies, Inc. (NYSE:CMT), Drive Shack Inc. (NYSE:DS), Advanced Emissions Solutions, Inc. (NASDAQ:ADES), Idera Pharmaceuticals Inc (NASDAQ:IDRA), Rockwell Medical Inc (NASDAQ:RMTI), and First Eagle Alternative Capital BDC, Inc. (NASDAQ:FCRD). All of these stocks' market caps are closest to IMBI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CTG,5,12432,0 CMT,4,11881,0 DS,7,1378,-2 ADES,7,13306,0 IDRA,7,12828,1 RMTI,4,4228,0 FCRD,6,9332,0 Average,5.7,9341,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.7 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $4 million in IMBI's case. Drive Shack Inc. (NYSE:DS) is the most popular stock in this table. On the other hand Core Molding Technologies, Inc. (NYSE:CMT) is the least popular one with only 4 bullish hedge fund positions. iMedia Brands, Inc. (NASDAQ:IMBI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IMBI is 35. 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. 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 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 November 27th and surpassed the market again by 16.1 percentage points. Unfortunately IMBI wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); IMBI investors were disappointed as the stock returned 6.2% since the end of September (through 11/27) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.