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Is Inter Parfums, Inc. (NASDAQ:IPAR) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is IPAR a good stock to buy now? Inter Parfums, Inc. (NASDAQ:IPAR) was in 17 hedge funds' portfolios at the end of September. The all time high for this statistic is 22. IPAR shareholders have witnessed an increase in hedge fund interest recently. There were 15 hedge funds in our database with IPAR positions at the end of the second quarter. Our calculations also showed that IPAR 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Price of MFP Investors
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 we're going to take a peek at the latest hedge fund action surrounding Inter Parfums, Inc. (NASDAQ:IPAR).
Do Hedge Funds Think IPAR Is A Good Stock To Buy Now?
At the end of September, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards IPAR over the last 21 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Royce & Associates was the largest shareholder of Inter Parfums, Inc. (NASDAQ:IPAR), with a stake worth $33.8 million reported as of the end of September. Trailing Royce & Associates was Horizon Asset Management, which amassed a stake valued at $7.5 million. Arrowstreet Capital, Citadel Investment Group, and D E Shaw 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 Royce & Associates allocated the biggest weight to Inter Parfums, Inc. (NASDAQ:IPAR), around 0.37% of its 13F portfolio. MFP Investors is also relatively very bullish on the stock, designating 0.34 percent of its 13F equity portfolio to IPAR.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. MFP Investors, managed by Michael Price, initiated the most valuable position in Inter Parfums, Inc. (NASDAQ:IPAR). MFP Investors had $1.9 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $0.8 million position during the quarter. The following funds were also among the new IPAR investors: Israel Englander's Millennium Management, Paul Tudor Jones's Tudor Investment Corp, and Michael Gelband's ExodusPoint Capital.
Let's also examine hedge fund activity in other stocks similar to Inter Parfums, Inc. (NASDAQ:IPAR). We will take a look at Cinemark Holdings, Inc. (NYSE:CNK), First Financial Bancorp (NASDAQ:FFBC), Northwest Bancshares, Inc. (NASDAQ:NWBI), FBL Financial Group, Inc. (NYSE:FFG), Vista Outdoor Inc (NYSE:VSTO), Calavo Growers, Inc. (NASDAQ:CVGW), and Fortuna Silver Mines Inc. (NYSE:FSM). This group of stocks' market caps resemble IPAR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CNK,25,150590,1 FFBC,16,20797,3 NWBI,9,20409,1 FFG,11,46916,5 VSTO,28,257079,6 CVGW,11,80472,-3 FSM,13,53788,4 Average,16.1,90007,2.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.1 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $62 million in IPAR's case. Vista Outdoor Inc (NYSE:VSTO) is the most popular stock in this table. On the other hand Northwest Bancshares, Inc. (NASDAQ:NWBI) is the least popular one with only 9 bullish hedge fund positions. Inter Parfums, Inc. (NASDAQ:IPAR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IPAR is 51.2. 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 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 December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on IPAR as the stock returned 51.6% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.