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With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was IQVIA Holdings, Inc. (NYSE:IQV).
Is IQV a good stock to buy now? IQVIA Holdings, Inc. (NYSE:IQV) has experienced a decrease in hedge fund interest of late. IQVIA Holdings, Inc. (NYSE:IQV) was in 64 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 68. Our calculations also showed that IQV 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.
David E. Shaw of D.E. Shaw
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. Keeping this in mind we're going to go over the new hedge fund action surrounding IQVIA Holdings, Inc. (NYSE:IQV).
Hedge fund activity in IQVIA Holdings, Inc. (NYSE:IQV)
At the end of September, a total of 64 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -3% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards IQV over the last 21 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds, Farallon Capital held the most valuable stake in IQVIA Holdings, Inc. (NYSE:IQV), which was worth $555.9 million at the end of the third quarter. On the second spot was Steadfast Capital Management which amassed $428.3 million worth of shares. Third Point, D E Shaw, and Citadel Investment Group 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 RIT Capital Partners allocated the biggest weight to IQVIA Holdings, Inc. (NYSE:IQV), around 21.03% of its 13F portfolio. Cowbird Capital is also relatively very bullish on the stock, earmarking 12.54 percent of its 13F equity portfolio to IQV.
Because IQVIA Holdings, Inc. (NYSE:IQV) has witnessed declining sentiment from the aggregate hedge fund industry, it's easy to see that there were a few fund managers that slashed their positions entirely in the third quarter. Intriguingly, Samuel Isaly's OrbiMed Advisors dumped the largest stake of the "upper crust" of funds followed by Insider Monkey, totaling about $24.8 million in stock, and David Zorub's Parsifal Capital Management was right behind this move, as the fund dropped about $18.3 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 2 funds in the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as IQVIA Holdings, Inc. (NYSE:IQV) but similarly valued. These stocks are CrowdStrike Holdings, Inc. (NASDAQ:CRWD), Verisk Analytics, Inc. (NASDAQ:VRSK), KLA Corporation (NASDAQ:KLAC), Marriott International Inc (NYSE:MAR), MSCI Inc (NYSE:MSCI), The Hershey Company (NYSE:HSY), and Republic Services, Inc. (NYSE:RSG). This group of stocks' market values are closest to IQV's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CRWD,71,4300669,-7 VRSK,40,1112108,4 KLAC,33,899003,-4 MAR,56,2334020,8 MSCI,47,906149,3 HSY,43,1230648,4 RSG,37,870212,0 Average,46.7,1664687,1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 46.7 hedge funds with bullish positions and the average amount invested in these stocks was $1665 million. That figure was $3333 million in IQV's case. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) is the most popular stock in this table. On the other hand KLA Corporation (NASDAQ:KLAC) is the least popular one with only 33 bullish hedge fund positions. IQVIA Holdings, Inc. (NYSE:IQV) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IQV is 72. 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 positive signal but 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 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 beat the market again by 16 percentage points. Unfortunately IQV wasn't nearly as popular as these 20 stocks and hedge funds that were betting on IQV were disappointed as the stock returned 7.9% since the end of September (through 12/2) 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 this year.
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Disclosure: None. This article was originally published at Insider Monkey.