Is Investors Title Company (ITIC) A Good Stock To Buy?
As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Investors Title Company (NASDAQ:ITIC).
Is ITIC a good stock to buy now? Investors who are in the know were cutting their exposure. The number of bullish hedge fund positions went down by 2 lately. Investors Title Company (NASDAQ:ITIC) was in 5 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 7. Our calculations also showed that ITIC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 7 hedge funds in our database with ITIC holdings at the end of December.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Tom Gayner of Markel Gayner Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. With all of this in mind let's take a peek at the new hedge fund action surrounding Investors Title Company (NASDAQ:ITIC).
Do Hedge Funds Think ITIC Is A Good Stock To Buy Now?
At the end of March, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in ITIC over the last 23 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Among these funds, Markel Gayner Asset Management held the most valuable stake in Investors Title Company (NASDAQ:ITIC), which was worth $35.4 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $3.9 million worth of shares. Wallace Capital Management, Wallace Capital Management, and Millennium 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 Markel Gayner Asset Management allocated the biggest weight to Investors Title Company (NASDAQ:ITIC), around 0.49% of its 13F portfolio. Wallace Capital Management is also relatively very bullish on the stock, setting aside 0.09 percent of its 13F equity portfolio to ITIC.
Since Investors Title Company (NASDAQ:ITIC) has witnessed declining sentiment from the aggregate hedge fund industry, it's safe to say that there lies a certain "tier" of fund managers who were dropping their positions entirely by the end of the first quarter. Interestingly, Noam Gottesman's GLG Partners sold off the largest investment of the "upper crust" of funds tracked by Insider Monkey, totaling close to $0.9 million in stock. John Overdeck and David Siegel's fund, Two Sigma Advisors, also cut its stock, about $0.2 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the first quarter.
Let's go over hedge fund activity in other stocks similar to Investors Title Company (NASDAQ:ITIC). We will take a look at TFF Pharmaceuticals, Inc. (NASDAQ:TFFP), North American Construction Group Ltd. (NYSE:NOA), CymaBay Therapeutics Inc (NASDAQ:CBAY), WhiteHorse Finance, Inc. (NASDAQ:WHF), United Insurance Holdings Corp. (NASDAQ:UIHC), Silicom Ltd. (NASDAQ:SILC), and Landec Corporation (NASDAQ:LNDC). This group of stocks' market valuations are closest to ITIC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TFFP,17,48807,8 NOA,10,37315,2 CBAY,18,122046,-1 WHF,3,2144,1 UIHC,7,9692,-2 SILC,10,23118,1 LNDC,13,74030,0 Average,11.1,45307,1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.1 hedge funds with bullish positions and the average amount invested in these stocks was $45 million. That figure was $42 million in ITIC's case. CymaBay Therapeutics Inc (NASDAQ:CBAY) is the most popular stock in this table. On the other hand WhiteHorse Finance, Inc. (NASDAQ:WHF) is the least popular one with only 3 bullish hedge fund positions. Investors Title Company (NASDAQ:ITIC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ITIC is 31.1. 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 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 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately ITIC wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ITIC investors were disappointed as the stock returned 2.9% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
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