The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Forterra, Inc. (NASDAQ:FRTA).
Forterra, Inc. (NASDAQ:FRTA) has experienced a decrease in enthusiasm from smart money recently. FRTA was in 14 hedge funds’ portfolios at the end of the first quarter of 2020. There were 15 hedge funds in our database with FRTA holdings at the end of the previous quarter. Our calculations also showed that FRTA 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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Donald Sussman of Paloma Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s analyze the recent hedge fund action encompassing Forterra, Inc. (NASDAQ:FRTA).
Hedge fund activity in Forterra, Inc. (NASDAQ:FRTA)
At Q1’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in FRTA a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Electron Capital Partners, managed by Jos Shaver, holds the biggest position in Forterra, Inc. (NASDAQ:FRTA). Electron Capital Partners has a $16.3 million position in the stock, comprising 4.3% of its 13F portfolio. Sitting at the No. 2 spot is Royce & Associates, managed by Chuck Royce, which holds a $9.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers that hold long positions consist of Don Morgan’s Brigade Capital, D. E. Shaw’s D E Shaw and Renaissance Technologies. In terms of the portfolio weights assigned to each position Electron Capital Partners allocated the biggest weight to Forterra, Inc. (NASDAQ:FRTA), around 4.27% of its 13F portfolio. Brigade Capital is also relatively very bullish on the stock, designating 0.27 percent of its 13F equity portfolio to FRTA.
Due to the fact that Forterra, Inc. (NASDAQ:FRTA) has witnessed a decline in interest from the smart money, it’s easy to see that there lies a certain “tier” of money managers that decided to sell off their entire stakes by the end of the first quarter. It’s worth mentioning that Matt Diserio and Disque Deane Jr.’s Water Asset Management cut the biggest investment of all the hedgies monitored by Insider Monkey, totaling about $3.6 million in stock, and Paul Tudor Jones’s Tudor Investment Corp was right behind this move, as the fund dropped about $0.6 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 1 funds by the end of the first quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Forterra, Inc. (NASDAQ:FRTA) but similarly valued. These stocks are SIGA Technologies Inc. (NASDAQ:SIGA), Antares Pharma Inc (NASDAQ:ATRS), VirnetX Holding Corporation (NYSE:VHC), and Donegal Group, Inc. (NASDAQ:DGICB). This group of stocks’ market caps are closest to FRTA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SIGA | 10 | 39676 | -1 |
| ATRS | 20 | 23019 | 7 |
| VHC | 3 | 819 | 2 |
| DGICB | 1 | 312 | 0 |
| Average | 8.5 | 15957 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $38 million in FRTA’s case. Antares Pharma Inc (NASDAQ:ATRS) is the most popular stock in this table. On the other hand Donegal Group, Inc. (NASDAQ:DGICB) is the least popular one with only 1 bullish hedge fund positions. Forterra, Inc. (NASDAQ:FRTA) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.3% in 2020 through June 25th but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on FRTA as the stock returned 61.2% in Q2 (through June 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Forterra Inc.
Follow Forterra Inc.
Disclosure: None. This article was originally published at Insider Monkey.
