Most Hedge Funds Sticking With IBERIABANK Corporation (IBKC)
In this article we will take a look at whether hedge funds think IBERIABANK Corporation (NASDAQ:IBKC) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is IBERIABANK Corporation (NASDAQ:IBKC) a buy, sell, or hold? Money managers are becoming less confident. The number of bullish hedge fund bets retreated by 2 lately. Our calculations also showed that IBKC isn't among the 30 most popular stocks among hedge funds (click for Q1 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 a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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James Dondero of Highland Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's view the key hedge fund action surrounding IBERIABANK Corporation (NASDAQ:IBKC).
Hedge fund activity in IBERIABANK Corporation (NASDAQ:IBKC)
At Q1's end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the fourth quarter of 2019. By comparison, 26 hedge funds held shares or bullish call options in IBKC a year ago. With the smart money's sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in IBERIABANK Corporation (NASDAQ:IBKC) was held by Citadel Investment Group, which reported holding $47.2 million worth of stock at the end of September. It was followed by Alpine Associates with a $23.9 million position. Other investors bullish on the company included One Fin Capital Management, Springbok Capital, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position One Fin Capital Management allocated the biggest weight to IBERIABANK Corporation (NASDAQ:IBKC), around 6.66% of its 13F portfolio. Truvvo Partners is also relatively very bullish on the stock, setting aside 2 percent of its 13F equity portfolio to IBKC.
Judging by the fact that IBERIABANK Corporation (NASDAQ:IBKC) has witnessed declining sentiment from the aggregate hedge fund industry, it's safe to say that there is a sect of hedgies that slashed their positions entirely heading into Q4. Interestingly, Paul Tudor Jones's Tudor Investment Corp dumped the biggest investment of the "upper crust" of funds monitored by Insider Monkey, comprising an estimated $19.8 million in stock. Renaissance Technologies, also said goodbye to its stock, about $10.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds heading into Q4.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as IBERIABANK Corporation (NASDAQ:IBKC) but similarly valued. We will take a look at Frontline Ltd (NYSE:FRO), Alarm.Com Holdings Inc (NASDAQ:ALRM), Alector, Inc. (NASDAQ:ALEC), and EPR Properties (NYSE:EPR). This group of stocks' market caps resemble IBKC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FRO,24,116530,7 ALRM,23,153195,-5 ALEC,15,416696,2 EPR,23,149422,-1 Average,21.25,208961,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $209 million. That figure was $129 million in IBKC's case. Frontline Ltd (NYSE:FRO) is the most popular stock in this table. On the other hand Alector, Inc. (NASDAQ:ALEC) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks IBERIABANK Corporation (NASDAQ:IBKC) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately IBKC wasn't nearly as popular as these 10 stocks and hedge funds that were betting on IBKC were disappointed as the stock returned 17.3% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
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