Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by more than 8 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Innovative Solutions and Support, Inc. (NASDAQ:ISSC).
Innovative Solutions and Support, Inc. (NASDAQ:ISSC) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of September. At the end of this article we will also compare ISSC to other stocks including Jupai Holdings Limited (NYSE:JP), S&W Seed Company (NASDAQ:SANW), and Houston Wire & Cable Company (NASDAQ:HWCC) to get a better sense of its popularity.
If you'd ask most investors, hedge funds are perceived as worthless, outdated investment vehicles of years past. While there are over 8000 funds trading at present, Our researchers look at the moguls of this group, around 750 funds. These money managers have their hands on bulk of all hedge funds' total capital, and by monitoring their top investments, Insider Monkey has come up with numerous investment strategies that have historically surpassed the broader indices. Insider Monkey's flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_375529" align="aligncenter" width="450"] Mario Gabelli of GAMCO Investors[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a look at the recent hedge fund action encompassing Innovative Solutions and Support, Inc. (NASDAQ:ISSC).
How have hedgies been trading Innovative Solutions and Support, Inc. (NASDAQ:ISSC)?
At the end of the third quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in ISSC over the last 17 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies has the biggest position in Innovative Solutions and Support, Inc. (NASDAQ:ISSC), worth close to $2.2 million, corresponding to less than 0.1%% of its total 13F portfolio. The second largest stake is held by Mario Gabelli of GAMCO Investors, with a $0.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. In terms of the portfolio weights assigned to each position GAMCO Investors allocated the biggest weight to Innovative Solutions and Support, Inc. (NASDAQ:ISSC), around 0.0042% of its portfolio. Royce & Associates is also relatively very bullish on the stock, designating 0.0034 percent of its 13F equity portfolio to ISSC.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Innovative Solutions and Support, Inc. (NASDAQ:ISSC) but similarly valued. We will take a look at Jupai Holdings Limited (NYSE:JP), S&W Seed Company (NASDAQ:SANW), Houston Wire & Cable Company (NASDAQ:HWCC), and NantHealth, Inc. (NASDAQ:NH). This group of stocks' market caps are closest to ISSC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position JP,4,278,3 SANW,7,49807,0 HWCC,7,17580,2 NH,7,699,2 Average,6.25,17091,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $17 million. That figure was $3 million in ISSC's case. S&W Seed Company (NASDAQ:SANW) is the most popular stock in this table. On the other hand Jupai Holdings Limited (NYSE:JP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Innovative Solutions and Support, Inc. (NASDAQ:ISSC) is even less popular than JP. Hedge funds dodged a bullet by taking a bearish stance towards ISSC. Our calculations showed that the top 20 most popular hedge fund stocks returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately ISSC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ISSC investors were disappointed as the stock returned -5.7% during the fourth quarter (through 11/22) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.