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Were Hedge Funds Right About IDACORP Inc (IDA)?

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·6 min read
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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about IDACORP Inc (NYSE:IDA) in this article.

Is IDACORP Inc (NYSE:IDA) a bargain? Hedge funds were in a bullish mood. The number of long hedge fund bets improved by 3 recently. IDACORP Inc (NYSE:IDA) was in 17 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 31. Our calculations also showed that IDA isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 14 hedge funds in our database with IDA positions at the end of the fourth quarter.

Today there are numerous formulas market participants employ to evaluate their holdings. Two of the most underrated formulas are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top investment managers can trounce the market by a very impressive margin (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Michael Gelband of ExodusPoint Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Now we're going to review the new hedge fund action surrounding IDACORP Inc (NYSE:IDA).

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

At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from the fourth quarter of 2020. By comparison, 24 hedge funds held shares or bullish call options in IDA a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

The largest stake in IDACORP Inc (NYSE:IDA) was held by Citadel Investment Group, which reported holding $39.6 million worth of stock at the end of December. It was followed by AQR Capital Management with a $23.3 million position. Other investors bullish on the company included D E Shaw, Renaissance Technologies, and Fisher Asset Management. In terms of the portfolio weights assigned to each position Coann Capital allocated the biggest weight to IDACORP Inc (NYSE:IDA), around 3.8% of its 13F portfolio. Fairpointe Capital is also relatively very bullish on the stock, dishing out 0.69 percent of its 13F equity portfolio to IDA.

As aggregate interest increased, key hedge funds were breaking ground themselves. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the largest position in IDACORP Inc (NYSE:IDA). Adage Capital Management had $14.5 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $5.8 million position during the quarter. The following funds were also among the new IDA investors: Matthew Davis's Coann Capital, Steve Cohen's Point72 Asset Management, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as IDACORP Inc (NYSE:IDA) but similarly valued. We will take a look at Amyris Inc (NASDAQ:AMRS), RLI Corp. (NYSE:RLI), Flowers Foods, Inc. (NYSE:FLO), MSC Industrial Direct Co Inc (NYSE:MSM), Macy's, Inc. (NYSE:M), Grand Canyon Education Inc (NASDAQ:LOPE), and Petco Health and Wellness Company, Inc. (NASDAQ:WOOF). This group of stocks' market caps match IDA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMRS,14,641287,-1 RLI,14,189969,-1 FLO,26,301870,-1 MSM,20,393613,2 M,31,790325,-3 LOPE,24,195853,-2 WOOF,25,201907,25 Average,22,387832,2.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $388 million. That figure was $174 million in IDA's case. Macy's, Inc. (NYSE:M) is the most popular stock in this table. On the other hand Amyris Inc (NASDAQ:AMRS) is the least popular one with only 14 bullish hedge fund positions. IDACORP Inc (NYSE:IDA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for IDA is 33.3. 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 negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately IDA wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); IDA investors were disappointed as the stock returned 5.5% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.