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Is The Interpublic Group of Companies Inc (IPG) Going to Burn These Hedge Funds?

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In this article we will analyze whether The Interpublic Group of Companies Inc (NYSE:IPG) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is The Interpublic Group of Companies Inc (NYSE:IPG) a buy right now? The smart money was in a bullish mood. The number of bullish hedge fund bets went up by 2 recently. The Interpublic Group of Companies Inc (NYSE:IPG) was in 31 hedge funds' portfolios at the end of June. The all time high for this statistic is 38. Our calculations also showed that IPG isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Louis Navellier of Navellier & Associates

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we're going to analyze the new hedge fund action encompassing The Interpublic Group of Companies Inc (NYSE:IPG).

Do Hedge Funds Think IPG Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in IPG a year ago. With hedge funds' sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

Among these funds, Ariel Investments held the most valuable stake in The Interpublic Group of Companies Inc (NYSE:IPG), which was worth $317.4 million at the end of the second quarter. On the second spot was Arrowstreet Capital which amassed $75.9 million worth of shares. Junto Capital Management, GAMCO Investors, and Pzena Investment 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 Ariel Investments allocated the biggest weight to The Interpublic Group of Companies Inc (NYSE:IPG), around 2.98% of its 13F portfolio. L2 Asset Management is also relatively very bullish on the stock, dishing out 1.68 percent of its 13F equity portfolio to IPG.

Consequently, key hedge funds have been driving this bullishness. Centiva Capital, managed by Karim Abbadi and Edward McBride, established the largest position in The Interpublic Group of Companies Inc (NYSE:IPG). Centiva Capital had $1.2 million invested in the company at the end of the quarter. Bruce Kovner's Caxton Associates LP also made a $0.5 million investment in the stock during the quarter. The other funds with brand new IPG positions are Paul Tudor Jones's Tudor Investment Corp, Louis Navellier's Navellier & Associates, and Greg Poole's Echo Street Capital Management.

Let's check out hedge fund activity in other stocks similar to The Interpublic Group of Companies Inc (NYSE:IPG). We will take a look at Nordson Corporation (NASDAQ:NDSN), Vail Resorts, Inc. (NYSE:MTN), The Gap Inc. (NYSE:GPS), FactSet Research Systems Inc. (NYSE:FDS), Quanta Services Inc (NYSE:PWR), Steel Dynamics, Inc. (NASDAQ:STLD), and Fidelity National Financial Inc (NYSE:FNF). This group of stocks' market valuations match IPG's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NDSN,34,311616,8 MTN,40,883541,4 GPS,43,910661,1 FDS,28,490774,-2 PWR,40,945202,7 STLD,26,538358,0 FNF,34,1303820,-5 Average,35,769139,1.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $769 million. That figure was $648 million in IPG's case. The Gap Inc. (NYSE:GPS) is the most popular stock in this table. On the other hand Steel Dynamics, Inc. (NASDAQ:STLD) is the least popular one with only 26 bullish hedge fund positions. The Interpublic Group of Companies Inc (NYSE:IPG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IPG is 46.2. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on IPG as the stock returned 18.5% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.