Is ITCI Stock A Buy or Sell?
In this article we will check out the progression of hedge fund sentiment towards Intra-Cellular Therapies Inc (NASDAQ:ITCI) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is ITCI stock a buy? Money managers were in a bearish mood. The number of long hedge fund bets fell by 3 lately. Intra-Cellular Therapies Inc (NASDAQ:ITCI) was in 23 hedge funds' portfolios at the end of December. The all time high for this statistic is 27. Our calculations also showed that ITCI isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 26 hedge funds in our database with ITCI positions at the end of the third quarter.
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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 124 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Arthur B Cohen and Joseph Healey of Healthcor Management LP
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x 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. With all of this in mind we're going to check out the fresh hedge fund action encompassing Intra-Cellular Therapies Inc (NASDAQ:ITCI).
Do Hedge Funds Think ITCI Is A Good Stock To Buy Now?
At Q4's end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from one quarter earlier. On the other hand, there were a total of 12 hedge funds with a bullish position in ITCI a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Marshall Wace LLP, managed by Paul Marshall and Ian Wace, holds the number one position in Intra-Cellular Therapies Inc (NASDAQ:ITCI). Marshall Wace LLP has a $95.9 million position in the stock, comprising 0.5% of its 13F portfolio. The second most bullish fund manager is Robert Pohly of Samlyn Capital, with a $52.8 million position; 0.8% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions comprise Israel Englander's Millennium Management, Ken Griffin's Citadel Investment Group and Aaron Cowen's Suvretta Capital Management. In terms of the portfolio weights assigned to each position SilverArc Capital allocated the biggest weight to Intra-Cellular Therapies Inc (NASDAQ:ITCI), around 3.7% of its 13F portfolio. Eversept Partners is also relatively very bullish on the stock, setting aside 1.35 percent of its 13F equity portfolio to ITCI.
Seeing as Intra-Cellular Therapies Inc (NASDAQ:ITCI) has faced a decline in interest from the entirety of the hedge funds we track, we can see that there was a specific group of hedge funds who were dropping their entire stakes heading into Q1. At the top of the heap, Steve Cohen's Point72 Asset Management sold off the biggest stake of the 750 funds followed by Insider Monkey, comprising an estimated $14.3 million in stock. Frank Fu's fund, CaaS Capital, also dumped its stock, about $5.1 million worth. These moves are important to note, as total hedge fund interest fell by 3 funds heading into Q1.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Intra-Cellular Therapies Inc (NASDAQ:ITCI) but similarly valued. We will take a look at Assured Guaranty Ltd. (NYSE:AGO), The Goodyear Tire & Rubber Company (NASDAQ:GT), Cabot Corporation (NYSE:CBT), Oi SA (NYSE:OIBR), Madison Square Garden Entertainment Corp. (NYSE:MSGE), Kennedy-Wilson Holdings Inc (NYSE:KW), and MGE Energy, Inc. (NASDAQ:MGEE). This group of stocks' market caps resemble ITCI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AGO,17,155561,-10 GT,27,216500,3 CBT,20,106618,-2 OIBR,3,70994,-3 MSGE,27,453469,-7 KW,16,448055,-2 MGEE,6,45138,0 Average,16.6,213762,-3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.6 hedge funds with bullish positions and the average amount invested in these stocks was $214 million. That figure was $377 million in ITCI's case. The Goodyear Tire & Rubber Company (NASDAQ:GT) is the most popular stock in this table. On the other hand Oi SA (NYSE:OIBR) is the least popular one with only 3 bullish hedge fund positions. Intra-Cellular Therapies Inc (NASDAQ:ITCI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ITCI is 69.2. 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. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately ITCI wasn't nearly as popular as these 30 stocks and hedge funds that were betting on ITCI were disappointed as the stock returned -5.3% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
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