Here’s What Hedge Funds Think About Interpublic Group of Companies Inc (IPG)

Nina Todic

Wed, Jun 19, 2019, 6:10 PM

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards The Interpublic Group of Companies, Inc. (NYSE:IPG).

Is The Interpublic Group of Companies, Inc. (NYSE:IPG) the right pick for your portfolio? Prominent investors are taking a pessimistic view. The number of long hedge fund bets dropped by 3 in recent months. Our calculations also showed that ipg isn't among the 30 most popular stocks among hedge funds.

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

We're going to take a gander at the recent hedge fund action encompassing The Interpublic Group of Companies, Inc. (NYSE:IPG).

How are hedge funds trading The Interpublic Group of Companies, Inc. (NYSE:IPG)?

At Q1's end, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the fourth quarter of 2018. By comparison, 21 hedge funds held shares or bullish call options in IPG a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey's hedge fund database, Pzena Investment Management, managed by Richard S. Pzena, holds the most valuable position in The Interpublic Group of Companies, Inc. (NYSE:IPG). Pzena Investment Management has a $346.1 million position in the stock, comprising 1.9% of its 13F portfolio. The second most bullish fund manager is Ariel Investments, managed by John W. Rogers, which holds a $139.2 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism include Jim Simons's Renaissance Technologies, Mario Gabelli's GAMCO Investors and Steve Cohen's Point72 Asset Management.

Because The Interpublic Group of Companies, Inc. (NYSE:IPG) has witnessed falling interest from hedge fund managers, logic holds that there was a specific group of fund managers that slashed their full holdings heading into Q3. At the top of the heap, Vikas Lunia's Lunia Capital sold off the largest stake of the "upper crust" of funds watched by Insider Monkey, totaling an estimated $11.1 million in stock. Phill Gross and Robert Atchinson's fund, Adage Capital Management, also cut its stock, about $9.8 million worth. These transactions are important to note, as total hedge fund interest dropped by 3 funds heading into Q3.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as The Interpublic Group of Companies, Inc. (NYSE:IPG) but similarly valued. We will take a look at Farfetch Limited (NYSE:FTCH), The Western Union Company (NYSE:WU), IPG Photonics Corporation (NASDAQ:IPGP), and Formula One Group (NASDAQ:FWONA). This group of stocks' market values are similar to IPG's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FTCH,43,558624,25 WU,20,416982,-6 IPGP,13,120021,-3 FWONA,21,321009,2 Average,24.25,354159,4.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $354 million. That figure was $854 million in IPG's case. Farfetch Limited (NYSE:FTCH) is the most popular stock in this table. On the other hand IPG Photonics Corporation (NASDAQ:IPGP) is the least popular one with only 13 bullish hedge fund positions. The Interpublic Group of Companies, Inc. (NYSE:IPG) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on IPG as the stock returned 2.6% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

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

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