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 Ion Geophysical Corp (NYSE:IO) to find out whether there were any major changes in hedge funds' views.
Ion Geophysical Corp (NYSE:IO) was in 3 hedge funds' portfolios at the end of September. The all time high for this statistics is 11. IO investors should be aware of a decrease in activity from the world's largest hedge funds in recent months. There were 5 hedge funds in our database with IO positions at the end of the second quarter. Our calculations also showed that IO 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.
In the eyes of most investors, hedge funds are assumed to be slow, old financial vehicles of years past. While there are more than 8000 funds trading at present, Our experts hone in on the top tier of this club, about 850 funds. These investment experts watch over the lion's share of all hedge funds' total asset base, and by monitoring their top investments, Insider Monkey has uncovered many investment strategies that have historically defeated the S&P 500 index. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
MILLENNIUM MANAGEMENT
Israel Englander of Millennium Management
With all of this in mind let's take a gander at the fresh hedge fund action surrounding Ion Geophysical Corp (NYSE:IO).
Hedge fund activity in Ion Geophysical Corp (NYSE:IO)
At Q3's end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of -40% from the second quarter of 2020. On the other hand, there were a total of 7 hedge funds with a bullish position in IO a year ago. With hedge funds' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies has the number one position in Ion Geophysical Corp (NYSE:IO), worth close to $1.6 million, corresponding to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Millennium Management, managed by Israel Englander, which holds a $0 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to Ion Geophysical Corp (NYSE:IO), around 0.0016% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, setting aside 0 percent of its 13F equity portfolio to IO.
Since Ion Geophysical Corp (NYSE:IO) has witnessed declining sentiment from hedge fund managers, it's safe to say that there lies a certain "tier" of hedgies who were dropping their entire stakes by the end of the third quarter. It's worth mentioning that Ken Griffin's Citadel Investment Group dumped the biggest position of the 750 funds tracked by Insider Monkey, valued at an estimated $0.1 million in stock. John Overdeck and David Siegel's fund, Two Sigma Advisors, also dropped its stock, about $0.1 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 2 funds by the end of the third quarter.
Let's check out hedge fund activity in other stocks similar to Ion Geophysical Corp (NYSE:IO). These stocks are Powerbridge Technologies Co., Ltd. (NASDAQ:PBTS), Globus Maritime Ltd (NASDAQ:GLBS), Energy Focus Inc (NASDAQ:EFOI), Iterum Therapeutics plc (NASDAQ:ITRM), Allied Healthcare Products Inc (NASDAQ:AHPI), Novus Therapeutics, Inc. (NASDAQ:NVUS), and AEterna Zentaris Inc. (NASDAQ:AEZS). This group of stocks' market valuations are similar to IO's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PBTS,1,78,-1 GLBS,2,114,0 EFOI,2,726,1 ITRM,2,1627,0 AHPI,1,1094,-1 NVUS,4,7103,0 AEZS,1,55,-1 Average,1.9,1542,-0.3 [/table]
As you can see these stocks had an average of 1.9 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $2 million in IO's case. Novus Therapeutics, Inc. (NASDAQ:NVUS) is the most popular stock in this table. On the other hand Powerbridge Technologies Co., Ltd. (NASDAQ:PBTS) is the least popular one with only 1 bullish hedge fund positions. Ion Geophysical Corp (NYSE:IO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for IO is 44.5. 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 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. Hedge funds were also right about betting on IO as the stock returned 24.7% since the end of Q3 (through 11/23) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
