Comfort Systems USA, Inc. (FIX): Hedge Fund Interest Is Cooling

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 Comfort Systems USA, Inc. (NYSE:FIX).

Comfort Systems USA, Inc. (NYSE:FIX) was in 20 hedge funds’ portfolios at the end of the first quarter of 2020. FIX has experienced a decrease in activity from the world’s largest hedge funds of late. There were 24 hedge funds in our database with FIX holdings at the end of the previous quarter. Our calculations also showed that FIX isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 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.

Fred DiSanto of Ancora Advisors

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. 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. With all of this in mind let’s go over the fresh hedge fund action surrounding Comfort Systems USA, Inc. (NYSE:FIX).

What does smart money think about Comfort Systems USA, Inc. (NYSE:FIX)?

At Q1’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FIX over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Among these funds, Royce & Associates held the most valuable stake in Comfort Systems USA, Inc. (NYSE:FIX), which was worth $14 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $11.4 million worth of shares. GLG Partners, Ancora Advisors, and Impax Asset 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 Third Avenue Management allocated the biggest weight to Comfort Systems USA, Inc. (NYSE:FIX), around 0.73% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, earmarking 0.59 percent of its 13F equity portfolio to FIX.

Because Comfort Systems USA, Inc. (NYSE:FIX) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there were a few hedgies that decided to sell off their entire stakes by the end of the first quarter. It’s worth mentioning that Richard S. Meisenberg’s ACK Asset Management sold off the biggest stake of all the hedgies tracked by Insider Monkey, totaling close to $19.9 million in stock, and George Baxter’s Sabrepoint Capital was right behind this move, as the fund dumped about $1.7 million worth. These transactions are interesting, as total hedge fund interest fell by 4 funds by the end of the first quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Comfort Systems USA, Inc. (NYSE:FIX) but similarly valued. These stocks are PagerDuty, Inc. (NYSE:PD), Kulicke and Soffa Industries Inc. (NASDAQ:KLIC), Cortexyme, Inc. (NASDAQ:CRTX), and AtriCure Inc. (NASDAQ:ATRC). This group of stocks’ market values resemble FIX’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $72 million in FIX’s case. PagerDuty, Inc. (NYSE:PD) is the most popular stock in this table. On the other hand Cortexyme, Inc. (NASDAQ:CRTX) is the least popular one with only 6 bullish hedge fund positions. Comfort Systems USA, Inc. (NYSE:FIX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 12.2% in 2020 through June 17th but beat the market by 14.8 percentage points. Unfortunately FIX wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FIX were disappointed as the stock returned 7.5% during the same time period 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 many of these stocks already outperformed the market so far this year.

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