The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 28. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards International Paper Company (NYSE:IP).
International Paper Company (NYSE:IP) shareholders have witnessed an increase in support from the world's most elite money managers in recent months. IP was in 31 hedge funds' portfolios at the end of the second quarter of 2019. There were 29 hedge funds in our database with IP holdings at the end of the previous quarter. Our calculations also showed that IP isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to view the new hedge fund action surrounding International Paper Company (NYSE:IP).
What have hedge funds been doing with International Paper Company (NYSE:IP)?
Heading into the third quarter of 2019, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. On the other hand, there were a total of 21 hedge funds with a bullish position in IP 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.
The largest stake in International Paper Company (NYSE:IP) was held by AQR Capital Management, which reported holding $98.6 million worth of stock at the end of March. It was followed by 12th Street Asset Management with a $25.6 million position. Other investors bullish on the company included Bridgewater Associates, Adage Capital Management, and Citadel Investment Group.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Skybridge Capital, managed by Anthony Scaramucci, created the largest position in International Paper Company (NYSE:IP). Skybridge Capital had $2.2 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also initiated a $1.6 million position during the quarter. The other funds with new positions in the stock are Lee Ainslie's Maverick Capital, Matthew Hulsizer's PEAK6 Capital Management, and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's now take a look at hedge fund activity in other stocks similar to International Paper Company (NYSE:IP). These stocks are Twilio Inc. (NYSE:TWLO), Laboratory Corp. of America Holdings (NYSE:LH), ANSYS, Inc. (NASDAQ:ANSS), and Cincinnati Financial Corporation (NASDAQ:CINF). This group of stocks' market caps are closest to IP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TWLO,63,2265236,4 LH,38,1528665,-1 ANSS,25,789741,-3 CINF,18,567138,-3 Average,36,1287695,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $1288 million. That figure was $257 million in IP's case. Twilio Inc. (NYSE:TWLO) is the most popular stock in this table. On the other hand Cincinnati Financial Corporation (NASDAQ:CINF) is the least popular one with only 18 bullish hedge fund positions. International Paper Company (NYSE:IP) is not the least popular stock in this group but hedge fund interest is still below average. 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately IP wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); IP investors were disappointed as the stock returned -2.2% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.