In this article we will check out the progression of hedge fund sentiment towards Fortune Brands Home & Security Inc (NYSE:FBHS) 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.
Fortune Brands Home & Security Inc (NYSE:FBHS) shareholders have witnessed a decrease in support from the world’s most elite money managers in recent months. Fortune Brands Home & Security Inc (NYSE:FBHS) was in 23 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 37. Our calculations also showed that FBHS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
David E. Shaw of D.E. Shaw
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 take a look at the new hedge fund action regarding Fortune Brands Home & Security Inc (NYSE:FBHS).
Do Hedge Funds Think FBHS Is A Good Stock To Buy Now?
At third quarter’s end, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -18% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FBHS over the last 25 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
More specifically, Holocene Advisors was the largest shareholder of Fortune Brands Home & Security Inc (NYSE:FBHS), with a stake worth $83 million reported as of the end of September. Trailing Holocene Advisors was Giverny Capital, which amassed a stake valued at $50 million. Millennium Management, D E Shaw, and AQR Capital 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 Giverny Capital allocated the biggest weight to Fortune Brands Home & Security Inc (NYSE:FBHS), around 2.98% of its 13F portfolio. Holocene Advisors is also relatively very bullish on the stock, dishing out 0.45 percent of its 13F equity portfolio to FBHS.
Because Fortune Brands Home & Security Inc (NYSE:FBHS) has experienced falling interest from the smart money, logic holds that there was a specific group of funds who were dropping their positions entirely in the third quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital said goodbye to the largest position of the “upper crust” of funds watched by Insider Monkey, comprising about $20.7 million in call options, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund said goodbye to about $4.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 5 funds in the third quarter.
Let’s check out hedge fund activity in other stocks similar to Fortune Brands Home & Security Inc (NYSE:FBHS). We will take a look at American Homes 4 Rent (NYSE:AMH), Hasbro, Inc. (NASDAQ:HAS), Tencent Music Entertainment Group (NYSE:TME), Mohawk Industries, Inc. (NYSE:MHK), GFL Environmental Inc. (NYSE:GFL), Equitable Holdings, Inc. (NYSE:EQH), and DaVita Inc (NYSE:DVA). This group of stocks’ market caps are closest to FBHS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMH | 33 | 786048 | 2 |
| HAS | 25 | 185494 | -2 |
| TME | 24 | 256088 | -11 |
| MHK | 38 | 1263338 | -6 |
| GFL | 19 | 758568 | -4 |
| EQH | 46 | 1704423 | 1 |
| DVA | 39 | 4811137 | 0 |
| Average | 32 | 1395014 | -2.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $1395 million. That figure was $345 million in FBHS’s case. Equitable Holdings, Inc. (NYSE:EQH) is the most popular stock in this table. On the other hand GFL Environmental Inc. (NYSE:GFL) is the least popular one with only 19 bullish hedge fund positions. Fortune Brands Home & Security Inc (NYSE:FBHS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FBHS is 26.1. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. A small number of hedge funds were also right about betting on FBHS as the stock returned 18.7% since the end of the third quarter (through 12/9) and outperformed the market by an even larger margin.
Follow Fortune Brands Innovations Inc. (NYSE:FBIN)
Follow Fortune Brands Innovations Inc. (NYSE:FBIN)
Suggested Articles:
- Top 20 Defense Contractors in 2021
- 8 Most Wanted Drug Lords by DEA in 2020
- 20 Most Gay Friendly Cities in the US
Disclosure: None. This article was originally published at Insider Monkey.
