Yahoo Finance Is Innovative Solutions & Support Inc (ISSC) Going to Burn These Hedge Funds?
Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Innovative Solutions & Support Inc (NASDAQ:ISSC).
Innovative Solutions & Support Inc (NASDAQ:ISSC) has experienced a decrease in hedge fund sentiment lately. Innovative Solutions & Support Inc (NASDAQ:ISSC) was in 3 hedge funds' portfolios at the end of March. The all time high for this statistic is 5. Our calculations also showed that ISSC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Chuck Royce of Royce & Associates
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $26 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let's take a look at the latest hedge fund action encompassing Innovative Solutions & Support Inc (NASDAQ:ISSC).
Do Hedge Funds Think ISSC Is A Good Stock To Buy Now?
At first quarter's end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ISSC over the last 23 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Renaissance Technologies has the largest position in Innovative Solutions & Support Inc (NASDAQ:ISSC), worth close to $3.6 million, corresponding to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Mario Gabelli of GAMCO Investors, with a $0.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. In terms of the portfolio weights assigned to each position GAMCO Investors allocated the biggest weight to Innovative Solutions & Support Inc (NASDAQ:ISSC), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0044 percent of its 13F equity portfolio to ISSC.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified ISSC as a viable investment and initiated a position in the stock.
Let's check out hedge fund activity in other stocks similar to Innovative Solutions & Support Inc (NASDAQ:ISSC). These stocks are ENDRA Life Sciences Inc. (NASDAQ:NDRA), Neonode, Inc (NASDAQ:NEON), StealthGas Inc. (NASDAQ:GASS), Limbach Holdings, Inc. (NASDAQ:LMB), Aprea Therapeutics, Inc. (NASDAQ:APRE), Randolph Bancorp, Inc. (NASDAQ:RNDB), and Elevate Credit, Inc. (NYSE:ELVT). All of these stocks' market caps match ISSC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NDRA,1,130,-1 NEON,1,156,0 GASS,6,42785,0 LMB,9,15208,2 APRE,3,5334,-3 RNDB,1,598,0 ELVT,8,10203,-3 Average,4.1,10631,-0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.1 hedge funds with bullish positions and the average amount invested in these stocks was $11 million. That figure was $5 million in ISSC's case. Limbach Holdings, Inc. (NASDAQ:LMB) is the most popular stock in this table. On the other hand ENDRA Life Sciences Inc. (NASDAQ:NDRA) is the least popular one with only 1 bullish hedge fund positions. Innovative Solutions & Support Inc (NASDAQ:ISSC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ISSC is 34.5. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately ISSC wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ISSC investors were disappointed as the stock returned -2.7% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
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