Do Hedge Funds Love IDACORP Inc (IDA)?

Reymerlyn Martin

Updated Sat, Dec 22, 2018, 9:02 PM

World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients' money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It's not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It's also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

Is IDACORP Inc (NYSE:IDA) a healthy stock for your portfolio? The smart money is becoming less hopeful. The number of bullish hedge fund positions fell by 1 lately. Our calculations also showed that IDA isn't among the 30 most popular stocks among hedge funds. IDA was in 11 hedge funds' portfolios at the end of September. There were 12 hedge funds in our database with IDA holdings at the end of the previous quarter.

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 flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Let's take a peek at the key hedge fund action regarding IDACORP Inc (NYSE:IDA).

What does the smart money think about IDACORP Inc (NYSE:IDA)?

At Q3's end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards IDA over the last 13 quarters. With the smart money's sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of IDACORP Inc (NYSE:IDA), with a stake worth $104.8 million reported as of the end of September. Trailing Renaissance Technologies was Fisher Asset Management, which amassed a stake valued at $35.3 million. AQR Capital Management, GLG Partners, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.

Because IDACORP Inc (NYSE:IDA) has experienced falling interest from the aggregate hedge fund industry, we can see that there exists a select few hedge funds who sold off their entire stakes heading into Q3. Intriguingly, Peter J. Hark's Shelter Harbor Advisors sold off the biggest stake of all the hedgies followed by Insider Monkey, comprising about $6.9 million in stock, and Matthew Tewksbury's Stevens Capital Management was right behind this move, as the fund sold off about $1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 1 funds heading into Q3.

Let's now take a look at hedge fund activity in other stocks similar to IDACORP Inc (NYSE:IDA). These stocks are Woodward Inc (NASDAQ:WWD), MSC Industrial Direct Co Inc (NYSE:MSM), Nuance Communications Inc. (NASDAQ:NUAN), and Quanta Services Inc (NYSE:PWR). This group of stocks' market caps resemble IDA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WWD,14,192547,2 MSM,19,115118,-3 NUAN,20,398090,0 PWR,34,508552,0 Average,21.75,303577,-0.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $304 million. That figure was $182 million in IDA's case. Quanta Services Inc (NYSE:PWR) is the most popular stock in this table. On the other hand Woodward Inc (NASDAQ:WWD) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks IDACORP Inc (NYSE:IDA) is even less popular than WWD. Considering that hedge funds aren't fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn't behind this stock. This isn't necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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

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