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Is ITI A Good Stock To Buy Now?

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Abigail Fisher
·6 min read
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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 Iteris Inc (NASDAQ:ITI).

Is ITI a good stock to buy now? Iteris Inc (NASDAQ:ITI) was in 11 hedge funds' portfolios at the end of September. The all time high for this statistics is 15. ITI has seen a decrease in hedge fund interest recently. There were 13 hedge funds in our database with ITI holdings at the end of June. Our calculations also showed that ITI 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.

In the 21st century investor’s toolkit there are tons of tools stock market investors employ to grade stocks. A pair of the most useful tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the top investment managers can outclass their index-focused peers by a healthy margin (see the details here).

Philip Hempleman Ardsley Partners
Philip Hempleman Ardsley Partners

Philip Hempleman of Ardsley Partners

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. Keeping this in mind we're going to take a look at the key hedge fund action surrounding Iteris Inc (NASDAQ:ITI).

Do Hedge Funds Think ITI Is A Good Stock To Buy Now?

At third quarter's end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ITI over the last 21 quarters. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the number one position in Iteris Inc (NASDAQ:ITI). Royce & Associates has a $10.3 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, holding a $4.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism consist of Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Israel Englander's Millennium Management and Philip Hempleman's Ardsley Partners. In terms of the portfolio weights assigned to each position Ardsley Partners allocated the biggest weight to Iteris Inc (NASDAQ:ITI), around 0.14% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.11 percent of its 13F equity portfolio to ITI.

Because Iteris Inc (NASDAQ:ITI) has faced bearish sentiment from the smart money, it's safe to say that there exists a select few money managers who sold off their full holdings by the end of the third quarter. Intriguingly, David Harding's Winton Capital Management dumped the largest position of all the hedgies monitored by Insider Monkey, totaling an estimated $0.4 million in stock, and Greg Eisner's Engineers Gate Manager was right behind this move, as the fund said goodbye to about $0.1 million worth. These transactions are interesting, as total hedge fund interest fell by 2 funds by the end of the third quarter.

Let's also examine hedge fund activity in other stocks similar to Iteris Inc (NASDAQ:ITI). We will take a look at Centennial Resource Development, Inc. (NASDAQ:CDEV), KVH Industries, Inc. (NASDAQ:KVHI), Tiptree Inc. (NASDAQ:TIPT), Oil States International, Inc. (NYSE:OIS), Sol-Gel Technologies Ltd. (NASDAQ:SLGL), Universal Technical Institute, Inc. (NYSE:UTI), and Eton Pharmaceuticals, Inc. (NASDAQ:ETON). This group of stocks' market values are similar to ITI's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CDEV,14,20635,-6 KVHI,4,4825,0 TIPT,3,842,1 OIS,12,10351,-1 SLGL,2,6172,-1 UTI,14,39515,2 ETON,4,29256,1 Average,7.6,15942,-0.6 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.6 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $19 million in ITI's case. Centennial Resource Development, Inc. (NASDAQ:CDEV) is the most popular stock in this table. On the other hand Sol-Gel Technologies Ltd. (NASDAQ:SLGL) is the least popular one with only 2 bullish hedge fund positions. Iteris Inc (NASDAQ:ITI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ITI is 62.5. 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on ITI as the stock returned 36.6% since the end of Q3 (through 12/8) 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.

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