Infrastructure and Energy Alternatives, Inc. (IEA): Hedge Fund Sentiment Unchanged
Asma UL Husna
6 min read
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Infrastructure and Energy Alternatives, Inc. (NASDAQ:IEA).
Hedge fund interest in Infrastructure and Energy Alternatives, Inc. (NASDAQ:IEA) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare IEA to other stocks including KBL Merger Corp. IV (NASDAQ:KBLM), Aviat Networks Inc (NASDAQ:AVNW), and Ring Energy Inc (NYSE:REI) to get a better sense of its popularity.
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 58 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Howard Marks of Oaktree Capital Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's go over the key hedge fund action regarding Infrastructure and Energy Alternatives, Inc. (NASDAQ:IEA).
What have hedge funds been doing with Infrastructure and Energy Alternatives, Inc. (NASDAQ:IEA)?
At Q1's end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in IEA over the last 18 quarters. With hedge funds' sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Among these funds, Royce & Associates held the most valuable stake in Infrastructure and Energy Alternatives, Inc. (NASDAQ:IEA), which was worth $1.8 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $0.5 million worth of shares. Millennium Management, Greenhaven Road Investment Management, and Oaktree Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Greenhaven Road Investment Management allocated the biggest weight to Infrastructure and Energy Alternatives, Inc. (NASDAQ:IEA), around 0.1% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to IEA.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the first quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Infrastructure and Energy Alternatives, Inc. (NASDAQ:IEA) but similarly valued. We will take a look at KBL Merger Corp. IV (NASDAQ:KBLM), Aviat Networks Inc (NASDAQ:AVNW), Ring Energy Inc (NYSE:REI), and Elevate Credit, Inc. (NYSE:ELVT). All of these stocks' market caps are similar to IEA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KBLM,4,368,0 AVNW,5,9875,0 REI,6,596,-4 ELVT,12,3291,1 Average,6.75,3533,-0.75 [/table]
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $3 million in IEA's case. Elevate Credit, Inc. (NYSE:ELVT) is the most popular stock in this table. On the other hand KBL Merger Corp. IV (NASDAQ:KBLM) is the least popular one with only 4 bullish hedge fund positions. Infrastructure and Energy Alternatives, Inc. (NASDAQ:IEA) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately IEA wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); IEA investors were disappointed as the stock returned 18.9% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
