We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money 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 (like Ackman’s recent Valeant losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards HB Fuller Co (NYSE:FUL).
Is HB Fuller Co (NYSE:FUL) a worthy investment right now? The smart money is turning bullish. The number of long hedge fund positions inched up by 2 lately. FUL was in 11 hedge funds’ portfolios at the end of September. There were 9 hedge funds in our database with FUL holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Diamond Resorts International Inc (NYSE:DRII), Marcus & Millichap Inc (NYSE:MMI), and Enbridge Energy Management, L.L.C. (NYSE:EEQ) to gather more data points.
Follow Fuller H B Co (NYSE:FUL)
Follow Fuller H B Co (NYSE:FUL)
At the moment there are a lot of signals shareholders employ to assess publicly traded companies. A couple of the most underrated signals are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can trounce the broader indices by a significant margin (see the details here).
With all of this in mind, let’s review the fresh action encompassing HB Fuller Co (NYSE:FUL).
Hedge fund activity in HB Fuller Co (NYSE:FUL)
Heading into Q4, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Daruma Asset Management, managed by Mariko Gordon, holds the largest position in HB Fuller Co (NYSE:FUL). Daruma Asset Management has an $53.6 million position in the stock, comprising 3.3% of its 13F portfolio. Sitting at the No. 2 spot is Echo Street Capital Management, led by Greg Poole, holding an $16.4 million position; 0.6% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors with similar optimism include Mario Gabelli’s GAMCO Investors, Chuck Royce’s Royce & Associates and Michael Platt and William Reeves’ BlueCrest Capital Mgmt..
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Royce & Associates created the most outsized position in HB Fuller Co (NYSE:FUL). Royce & Associates had $3.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated an $1.2 million position during the quarter. The only other fund with a new position in the stock is Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as HB Fuller Co (NYSE:FUL) but similarly valued. These stocks are Diamond Resorts International Inc (NYSE:DRII), Marcus & Millichap Inc (NYSE:MMI), Enbridge Energy Management, L.L.C. (NYSE:EEQ), and Rexnord Corp (NYSE:RXN). This group of stocks’ market values match FUL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DRII | 32 | 288556 | 5 |
| MMI | 14 | 69692 | -4 |
| EEQ | 7 | 27263 | -3 |
| RXN | 17 | 166220 | 1 |
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $138 million. That figure was $101 million in FUL’s case. Diamond Resorts International Inc (NYSE:DRII) is the most popular stock in this table. On the other hand Enbridge Energy Management, L.L.C. (NYSE:EEQ) is the least popular one with only 7 bullish hedge fund positions. HB Fuller Co (NYSE:FUL) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard DRII might be a better candidate to consider a long position.
