Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards ICF International Inc (NASDAQ:ICFI) to find out whether there were any major changes in hedge funds' views.
Is ICFI a good stock to buy now? ICF International Inc (NASDAQ:ICFI) investors should be aware of an increase in activity from the world's largest hedge funds in recent months. ICF International Inc (NASDAQ:ICFI) was in 12 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 17. Our calculations also showed that ICFI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ian Wace Marshall Wace
Ian Wace of Marshall Wace
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we're going to view the recent hedge fund action surrounding ICF International Inc (NASDAQ:ICFI).
Do Hedge Funds Think ICFI Is A Good Stock To Buy Now?
At third quarter's end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in ICFI 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.
Is ICFI A Good Stock To Buy?
The largest stake in ICF International Inc (NASDAQ:ICFI) was held by Marshall Wace LLP, which reported holding $5.8 million worth of stock at the end of September. It was followed by Third Avenue Management with a $5.1 million position. Other investors bullish on the company included SG Capital Management, Millennium Management, and Intrinsic Edge Capital. In terms of the portfolio weights assigned to each position SG Capital Management allocated the biggest weight to ICF International Inc (NASDAQ:ICFI), around 1.33% of its 13F portfolio. Third Avenue Management is also relatively very bullish on the stock, earmarking 0.72 percent of its 13F equity portfolio to ICFI.
As aggregate interest increased, key hedge funds have jumped into ICF International Inc (NASDAQ:ICFI) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the biggest position in ICF International Inc (NASDAQ:ICFI). Marshall Wace LLP had $5.8 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $3.1 million position during the quarter. The following funds were also among the new ICFI investors: Mark Coe's Intrinsic Edge Capital, Ken Griffin's Citadel Investment Group, and Dmitry Balyasny's Balyasny Asset Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as ICF International Inc (NASDAQ:ICFI) but similarly valued. These stocks are EnPro Industries, Inc. (NYSE:NPO), BEST Inc. (NYSE:BEST), Herc Holdings Inc. (NYSE:HRI), Infinera Corp. (NASDAQ:INFN), Annexon, Inc. (NASDAQ:ANNX), EnLink Midstream LLC (NYSE:ENLC), and Opera Limited (NASDAQ:OPRA). This group of stocks' market values match ICFI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NPO,18,144888,1 BEST,8,13537,2 HRI,19,440444,-2 INFN,20,261249,-1 ANNX,11,323562,11 ENLC,9,12533,2 OPRA,4,1682,-1 Average,12.7,171128,1.7 [/table]
As you can see these stocks had an average of 12.7 hedge funds with bullish positions and the average amount invested in these stocks was $171 million. That figure was $32 million in ICFI's case. Infinera Corp. (NASDAQ:INFN) is the most popular stock in this table. On the other hand Opera Limited (NASDAQ:OPRA) is the least popular one with only 4 bullish hedge fund positions. ICF International Inc (NASDAQ:ICFI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ICFI is 52.2. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on ICFI as the stock returned 23.7% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
