Here’s What Hedge Funds Think About Ingredion Inc (INGR)

Nina Todic

Tue, Jun 18, 2019, 8:20 PM

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors' consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETF by more than 6 percentage points so far this year. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Ingredion Inc (NYSE:INGR) from the perspective of those elite funds.

Ingredion Inc (NYSE:INGR) shareholders have witnessed a decrease in activity from the world's largest hedge funds in recent months. Our calculations also showed that ingr isn't among the 30 most popular stocks among hedge funds.

To most investors, hedge funds are viewed as unimportant, outdated investment vehicles of yesteryear. While there are greater than 8000 funds trading at present, Our researchers hone in on the masters of this group, about 750 funds. Most estimates calculate that this group of people oversee the majority of all hedge funds' total capital, and by keeping track of their best picks, Insider Monkey has found various investment strategies that have historically outstripped the broader indices. Insider Monkey's flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points a year since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.

Let's check out the recent hedge fund action surrounding Ingredion Inc (NYSE:INGR).

What have hedge funds been doing with Ingredion Inc (NYSE:INGR)?

At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in INGR over the last 15 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the biggest position in Ingredion Inc (NYSE:INGR). AQR Capital Management has a $74.8 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Fisher Asset Management, led by Ken Fisher, holding a $62.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other professional money managers that are bullish contain John Overdeck and David Siegel's Two Sigma Advisors, Israel Englander's Millennium Management and Jim Simons's Renaissance Technologies.

Judging by the fact that Ingredion Inc (NYSE:INGR) has faced falling interest from the aggregate hedge fund industry, it's easy to see that there exists a select few hedgies who sold off their full holdings heading into Q3. At the top of the heap, David Harding's Winton Capital Management said goodbye to the largest stake of the "upper crust" of funds watched by Insider Monkey, comprising close to $11.2 million in call options. Matthew Hulsizer's fund, PEAK6 Capital Management, also cut its call options, about $4.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds heading into Q3.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Ingredion Inc (NYSE:INGR) but similarly valued. We will take a look at RenaissanceRe Holdings Ltd. (NYSE:RNR), Park Hotels & Resorts Inc. (NYSE:PK), Starwood Property Trust, Inc. (NYSE:STWD), and New Residential Investment Corp (NYSE:NRZ). This group of stocks' market valuations resemble INGR's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RNR,20,500624,-2 PK,14,503382,-3 STWD,15,144343,-2 NRZ,18,187262,-7 Average,16.75,333903,-3.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $334 million. That figure was $295 million in INGR's case. RenaissanceRe Holdings Ltd. (NYSE:RNR) is the most popular stock in this table. On the other hand Park Hotels & Resorts Inc. (NYSE:PK) is the least popular one with only 14 bullish hedge fund positions. Ingredion Inc (NYSE:INGR) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately INGR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on INGR were disappointed as the stock returned -17.5% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

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

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