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The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Intrepid Potash, Inc. (NYSE:IPI).
Is IPI a good stock to buy now? Intrepid Potash, Inc. (NYSE:IPI) has experienced a decrease in enthusiasm from smart money lately. Intrepid Potash, Inc. (NYSE:IPI) was in 7 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 17. There were 8 hedge funds in our database with IPI positions at the end of the second quarter. Our calculations also showed that IPI 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 Gelband of ExodusPoint Capital
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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. Now we're going to go over the fresh hedge fund action surrounding Intrepid Potash, Inc. (NYSE:IPI).
Hedge fund activity in Intrepid Potash, Inc. (NYSE:IPI)
At the end of September, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in IPI over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Chuck Royce's Royce & Associates has the number one position in Intrepid Potash, Inc. (NYSE:IPI), worth close to $1.9 million, amounting to less than 0.1%% of its total 13F portfolio. Coming in second is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $0.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism contain Renaissance Technologies, D. E. Shaw's D E Shaw and Greg Eisner's Engineers Gate Manager. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to Intrepid Potash, Inc. (NYSE:IPI), around 0.02% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to IPI.
Judging by the fact that Intrepid Potash, Inc. (NYSE:IPI) has witnessed bearish sentiment from the aggregate hedge fund industry, we can see that there were a few money managers who were dropping their entire stakes heading into Q4. It's worth mentioning that Israel Englander's Millennium Management dropped the largest position of the "upper crust" of funds tracked by Insider Monkey, valued at about $0.1 million in stock. Ken Griffin's fund, Citadel Investment Group, also dropped its stock, about $0 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 1 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks similar to Intrepid Potash, Inc. (NYSE:IPI). We will take a look at Identiv, Inc. (NASDAQ:INVE), Bankwell Financial Group, Inc. (NASDAQ:BWFG), Orgenesis Inc. (NASDAQ:ORGS), Vista Gold Corp. (NYSE:VGZ), InflaRx N.V. (NASDAQ:IFRX), Sierra Oncology, Inc. (NASDAQ:SRRA), and La Jolla Pharmaceutical Company (NASDAQ:LJPC). This group of stocks' market caps resemble IPI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position INVE,8,12583,6 BWFG,6,24188,0 ORGS,2,3210,-4 VGZ,2,20819,-1 IFRX,6,8306,-5 SRRA,11,51075,2 LJPC,6,42200,-2 Average,5.9,23197,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.9 hedge funds with bullish positions and the average amount invested in these stocks was $23 million. That figure was $3 million in IPI's case. Sierra Oncology, Inc. (NASDAQ:SRRA) is the most popular stock in this table. On the other hand Orgenesis Inc. (NASDAQ:ORGS) is the least popular one with only 2 bullish hedge fund positions. Intrepid Potash, Inc. (NYSE:IPI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IPI is 44.1. 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. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on IPI as the stock returned 62.2% since the end of Q3 (through 12/2) 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.