Did The Smart Money Get FleetCor Technologies, Inc. (FLT) Right?

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards FleetCor Technologies, Inc. (NYSE:FLT) and determine whether hedge funds skillfully traded this stock.

FleetCor Technologies, Inc. (NYSE:FLT) investors should pay attention to a decrease in support from the world’s most elite money managers of late. FleetCor Technologies, Inc. (NYSE:FLT) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 60. There were 40 hedge funds in our database with FLT holdings at the end of June. Our calculations also showed that FLT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now we’re going to go over the recent hedge fund action encompassing FleetCor Technologies, Inc. (NYSE:FLT).

Ole Andreas Halvorsen of Viking Global

Do Hedge Funds Think FLT Is A Good Stock To Buy Now?

At the end of September, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in FLT over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Viking Global was the largest shareholder of FleetCor Technologies, Inc. (NYSE:FLT), with a stake worth $645 million reported as of the end of September. Trailing Viking Global was Orbis Investment Management, which amassed a stake valued at $528.9 million. Tiger Global Management LLC, Citadel Investment Group, and Maverick Capital 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 Incline Global Management allocated the biggest weight to FleetCor Technologies, Inc. (NYSE:FLT), around 6.03% of its 13F portfolio. Birch Run Capital is also relatively very bullish on the stock, designating 5.85 percent of its 13F equity portfolio to FLT.

Because FleetCor Technologies, Inc. (NYSE:FLT) has faced bearish sentiment from the smart money, we can see that there were a few hedge funds who sold off their entire stakes in the third quarter. At the top of the heap, Robert Pitts’s Steadfast Capital Management sold off the largest investment of all the hedgies followed by Insider Monkey, comprising about $56 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund cut about $20.3 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 9 funds in the third quarter.

Let’s go over hedge fund activity in other stocks similar to FleetCor Technologies, Inc. (NYSE:FLT). We will take a look at Dollar Tree, Inc. (NASDAQ:DLTR), TransUnion (NYSE:TRU), Mid America Apartment Communities Inc (NYSE:MAA), PPL Corporation (NYSE:PPL), Sun Communities Inc (NYSE:SUI), Martin Marietta Materials, Inc. (NYSE:MLM), and Fox Corporation (NASDAQ:FOX). This group of stocks’ market valuations match FLT’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.1 hedge funds with bullish positions and the average amount invested in these stocks was $1058 million. That figure was $2096 million in FLT’s case. Martin Marietta Materials, Inc. (NYSE:MLM) is the most popular stock in this table. On the other hand PPL Corporation (NYSE:PPL) is the least popular one with only 20 bullish hedge fund positions. FleetCor Technologies, Inc. (NYSE:FLT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FLT is 36.5. 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 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately, FLT wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); FLT investors were disappointed as the stock returned -8.8% since the end of September (through 1/31) 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 all of these stocks already outperformed the market since 2019.

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