Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Intercontinental Exchange Inc (NYSE:ICE).
Intercontinental Exchange Inc (NYSE:ICE) was in 58 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 64. ICE has experienced an increase in enthusiasm from smart money recently. There were 53 hedge funds in our database with ICE positions at the end of the fourth quarter. Our calculations also showed that ICE isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Kerr Neilson of Platinum Asset Management
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Do Hedge Funds Think ICE Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 58 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. On the other hand, there were a total of 61 hedge funds with a bullish position in ICE a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Intercontinental Exchange Inc (NYSE:ICE) was held by ARK Investment Management, which reported holding $627.3 million worth of stock at the end of December. It was followed by Cantillon Capital Management with a $474 million position. Other investors bullish on the company included Alkeon Capital Management, D E Shaw, and Harvard Management Co. In terms of the portfolio weights assigned to each position Truvvo Partners allocated the biggest weight to Intercontinental Exchange Inc (NYSE:ICE), around 32.55% of its 13F portfolio. Harvard Management Co is also relatively very bullish on the stock, earmarking 12.87 percent of its 13F equity portfolio to ICE.
As one would reasonably expect, key hedge funds have jumped into Intercontinental Exchange Inc (NYSE:ICE) headfirst. Harvard Management Co, managed by Rick Slocum, initiated the biggest position in Intercontinental Exchange Inc (NYSE:ICE). Harvard Management Co had $230.3 million invested in the company at the end of the quarter. Kerr Neilson's Platinum Asset Management also made a $20.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Tudor Jones's Tudor Investment Corp, Clint Carlson's Carlson Capital, and Qing Li's Sciencast Management.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Intercontinental Exchange Inc (NYSE:ICE) but similarly valued. These stocks are Air Products & Chemicals, Inc. (NYSE:APD), Marsh & McLennan Companies, Inc. (NYSE:MMC), ABB Ltd (NYSE:ABB), Ecolab Inc. (NYSE:ECL), Dominion Energy Inc. (NYSE:D), Autodesk, Inc. (NASDAQ:ADSK), and NIO Inc. (NYSE:NIO). This group of stocks' market valuations match ICE's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position APD,32,586835,-18 MMC,37,2143915,-6 ABB,11,563747,3 ECL,42,2403354,-3 D,39,1295937,-8 ADSK,66,3056525,0 NIO,28,1321170,-6 Average,36.4,1624498,-5.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.4 hedge funds with bullish positions and the average amount invested in these stocks was $1624 million. That figure was $3329 million in ICE's case. Autodesk, Inc. (NASDAQ:ADSK) is the most popular stock in this table. On the other hand ABB Ltd (NYSE:ABB) is the least popular one with only 11 bullish hedge fund positions. Intercontinental Exchange Inc (NYSE:ICE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ICE is 79.9. 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 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 17.2% in 2021 through June 11th and beat the market again by 3.3 percentage points. Unfortunately ICE wasn't nearly as popular as these 5 stocks and hedge funds that were betting on ICE were disappointed as the stock returned 0.9% since the end of March (through 6/11) 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.