FedEx Corporation (NYSE:FDX) shares are trending this morning after the company closed on its all-cash, €4.4 billion ($4.9 billion) acquisition of TNT Express, one of Europe’s largest logistics providers. The merger now creates what FedEx believes is the largest air express network in the world, as well as an impressive European road network. FedEx believes that the completed acquisition will add substantial value for shareholders by allowing the company to realize more economies of scale. Many analysts are bullish on FedEx for 2016 as they expect the company’s margins to expand via increased capital utilization and improved efficiencies. Shares also trade for only 13.5-times forward earnings estimates. Shares of the now-larger FedEx are up by 0.30% today.
Money managers were reducing their bets on the stock in Q1 however. The number of long hedge fund positions were cut by 2 recently. FDX was in 45 hedge funds’ portfolios at the end of March. There were 47 hedge funds in our database with FDX positions at the end of the previous quarter. At the end of this article we will also compare FDX to other stocks including Infosys Ltd ADR (NYSE:INFY), American Tower Corp (NYSE:AMT), and Carnival plc (ADR) (NYSE:CUK) to get a better sense of its popularity.
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In the 21st century investor’s toolkit there are a multitude of formulas stock traders can use to evaluate their holdings. A pair of the most useful formulas are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can outperform the broader indices by a solid margin (see the details here).
Of the funds tracked by Insider Monkey, Greenhaven Associates, managed by Edgar Wachenheim, holds the largest position in FedEx Corporation (NYSE:FDX). Greenhaven Associates has a $799.8 million position in the stock, comprising 15.3% of its 13F portfolio. The second largest stake is held by the Bill & Melinda Gates Foundation Trust, led by Michael Larson, holding a $492.2 million position; the fund has 2.9% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish contain Anthony Bozza’s Lakewood Capital Management, John Smith Clark’s Southpoint Capital Advisors, and Richard Chilton’s Chilton Investment Company.
On the next page we’ll look at some funds that sold off positions in FedEx during Q1, as well as compare the stock to a handful of others with similar market caps.
Seeing as FedEx Corporation (NYSE:FDX) has faced bearish sentiment from hedge fund managers, logic holds that there lies a certain “tier” of funds who were dropping their entire stakes by the end of the first quarter. Interestingly, James Dinan’s York Capital Management dropped the biggest position of the 750+ funds tracked by Insider Monkey, comprising close to $253.8 million in stock. Will Snellings’ fund, Marianas Fund Management, also cut its holding of shares, about $51.9 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 2 funds by the end of the first quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as FedEx Corporation (NYSE:FDX) but similarly valued. We will take a look at Infosys Ltd ADR (NYSE:INFY), American Tower Corp (NYSE:AMT), Carnival plc (ADR) (NYSE:CUK), and ABB Ltd (ADR) (NYSE:ABB). This group of stocks’ market caps resemble FDX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| INFY | 21 | 986936 | 0 |
| AMT | 40 | 2582713 | 2 |
| CUK | 5 | 65413 | -1 |
| ABB | 12 | 135889 | 1 |
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $943 million. That figure was $3.44 billion in FDX’s case. American Tower Corp (NYSE:AMT) is the most popular stock in this table. On the other hand Carnival plc (ADR) (NYSE:CUK) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks FedEx Corporation (NYSE:FDX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers and have a great deal of money invested in it, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
