In this article we will check out the progression of hedge fund sentiment towards Fluor Corporation (NYSE:FLR) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Fluor Corporation (NYSE:FLR) undervalued? Money managers were betting on the stock. The number of long hedge fund positions inched up by 5 in recent months. Fluor Corporation (NYSE:FLR) was in 22 hedge funds’ portfolios at the end of June. The all time high for this statistic is 29. Our calculations also showed that FLR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 17 hedge funds in our database with FLR positions at the end of the first quarter.
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
David Nierenberg of Nierenberg Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 review the key hedge fund action surrounding Fluor Corporation (NYSE:FLR).
Do Hedge Funds Think FLR Is A Good Stock To Buy Now?
At second quarter’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the first quarter of 2020. On the other hand, there were a total of 20 hedge funds with a bullish position in FLR a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Among these funds, Two Sigma Advisors held the most valuable stake in Fluor Corporation (NYSE:FLR), which was worth $29.3 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $20 million worth of shares. D E Shaw, Nierenberg Investment Management, and Millennium 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 Nierenberg Investment Management allocated the biggest weight to Fluor Corporation (NYSE:FLR), around 11.65% of its 13F portfolio. AWH Capital is also relatively very bullish on the stock, dishing out 4.31 percent of its 13F equity portfolio to FLR.
As one would reasonably expect, key money managers have jumped into Fluor Corporation (NYSE:FLR) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most valuable position in Fluor Corporation (NYSE:FLR). Marshall Wace LLP had $1.9 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $1.6 million investment in the stock during the quarter. The following funds were also among the new FLR investors: Michael Gelband’s ExodusPoint Capital, Qing Li’s Sciencast Management, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s go over hedge fund activity in other stocks similar to Fluor Corporation (NYSE:FLR). We will take a look at Verra Mobility Corporation (NASDAQ:VRRM), Independent Bank Corp (NASDAQ:INDB), Sally Beauty Holdings, Inc. (NYSE:SBH), Niu Technologies (NASDAQ:NIU), Gibraltar Industries Inc (NASDAQ:ROCK), Instil Bio, Inc. (NASDAQ:TIL), and Jack in the Box Inc. (NASDAQ:JACK). This group of stocks’ market values match FLR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VRRM | 22 | 395107 | 4 |
| INDB | 13 | 47935 | 2 |
| SBH | 22 | 143723 | 3 |
| NIU | 13 | 186938 | -1 |
| ROCK | 17 | 82296 | -3 |
| TIL | 14 | 561110 | -7 |
| JACK | 29 | 227139 | -1 |
| Average | 18.6 | 234893 | -0.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.6 hedge funds with bullish positions and the average amount invested in these stocks was $235 million. That figure was $124 million in FLR’s case. Jack in the Box Inc. (NASDAQ:JACK) is the most popular stock in this table. On the other hand Independent Bank Corp (NASDAQ:INDB) is the least popular one with only 13 bullish hedge fund positions. Fluor Corporation (NYSE:FLR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FLR is 60.9. 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 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on FLR as the stock returned 4.7% since the end of Q2 (through 10/22) 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.
