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Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Itron, Inc. (NASDAQ:ITRI).
Is ITRI a good stock to buy now? Hedge funds were in a bullish mood. The number of long hedge fund bets advanced by 2 lately. Itron, Inc. (NASDAQ:ITRI) was in 15 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 25. Our calculations also showed that ITRI 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 financial world there are dozens of indicators stock market investors employ to analyze stocks. A duo of the less utilized indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the best money managers can trounce their index-focused peers by a solid margin (see the details here).
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. Now let's analyze the latest hedge fund action regarding Itron, Inc. (NASDAQ:ITRI).
Do Hedge Funds Think ITRI Is A Good Stock To Buy Now?
At the end of September, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ITRI 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.
Among these funds, Impax Asset Management held the most valuable stake in Itron, Inc. (NASDAQ:ITRI), which was worth $164.4 million at the end of the third quarter. On the second spot was Cardinal Capital which amassed $34.1 million worth of shares. Southpoint Capital Advisors, Arrowstreet Capital, and Scopia Capital 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 Impax Asset Management allocated the biggest weight to Itron, Inc. (NASDAQ:ITRI), around 1.44% of its 13F portfolio. Cardinal Capital is also relatively very bullish on the stock, dishing out 1.42 percent of its 13F equity portfolio to ITRI.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls' herd. Renaissance Technologies, initiated the most valuable position in Itron, Inc. (NASDAQ:ITRI). Renaissance Technologies had $2.6 million invested in the company at the end of the quarter. Peter Muller's PDT Partners also made a $2 million investment in the stock during the quarter. The following funds were also among the new ITRI investors: Greg Eisner's Engineers Gate Manager, Paul Tudor Jones's Tudor Investment Corp, and Ken Griffin's Citadel Investment Group.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Itron, Inc. (NASDAQ:ITRI) but similarly valued. These stocks are Sensient Technologies Corporation (NYSE:SXT), ABM Industries, Inc. (NYSE:ABM), CarGurus, Inc. (NASDAQ:CARG), Stepan Company (NYSE:SCL), Echostar Corporation (NASDAQ:SATS), Brookfield Business Partners L.P. (NYSE:BBU), and Avient Corporation (NYSE:AVNT). This group of stocks' market valuations are closest to ITRI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SXT,22,219122,-1 ABM,18,48485,-3 CARG,32,328264,1 SCL,12,46672,-3 SATS,28,346080,-1 BBU,4,4337,1 AVNT,20,221331,-2 Average,19.4,173470,-1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $173 million. That figure was $276 million in ITRI's case. CarGurus, Inc. (NASDAQ:CARG) is the most popular stock in this table. On the other hand Brookfield Business Partners L.P. (NYSE:BBU) is the least popular one with only 4 bullish hedge fund positions. Itron, Inc. (NASDAQ:ITRI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ITRI is 44.6. 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. A small number of hedge funds were also right about betting on ITRI as the stock returned 38.6% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.