Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Comfort Systems USA, Inc. (NYSE:FIX).
Is Comfort Systems USA, Inc. (NYSE:FIX) ready to rally soon? Money managers are buying. The number of bullish hedge fund positions advanced by 1 recently. Our calculations also showed that FIX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). FIX was in 24 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 23 hedge funds in our database with FIX holdings at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by more than 41 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a peek at the new hedge fund action surrounding Comfort Systems USA, Inc. (NYSE:FIX).
How are hedge funds trading Comfort Systems USA, Inc. (NYSE:FIX)?
Heading into the first quarter of 2020, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FIX over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, ACK Asset Management held the most valuable stake in Comfort Systems USA, Inc. (NYSE:FIX), which was worth $19.9 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $18 million worth of shares. Millennium Management, GLG Partners, and Ancora Advisors 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 ACK Asset Management allocated the biggest weight to Comfort Systems USA, Inc. (NYSE:FIX), around 5.77% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, earmarking 1.04 percent of its 13F equity portfolio to FIX.
With a general bullishness amongst the heavyweights, key money managers have jumped into Comfort Systems USA, Inc. (NYSE:FIX) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, created the most outsized position in Comfort Systems USA, Inc. (NYSE:FIX). Balyasny Asset Management had $0.4 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $0.3 million position during the quarter. The other funds with new positions in the stock are Qing Li’s Sciencast Management, Peter Muller’s PDT Partners, and Steve Cohen’s Point72 Asset Management.
Let’s now review hedge fund activity in other stocks similar to Comfort Systems USA, Inc. (NYSE:FIX). These stocks are New York Mortgage Trust, Inc. (NASDAQ:NYMT), Dillard’s, Inc. (NYSE:DDS), Global Net Lease, Inc. (NYSE:GNL), and Jagged Peak Energy Inc. (NYSE:JAG). This group of stocks’ market valuations are closest to FIX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NYMT | 15 | 71598 | 4 |
| DDS | 20 | 346150 | -2 |
| GNL | 10 | 54469 | -5 |
| JAG | 11 | 146367 | -4 |
| Average | 14 | 154646 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $155 million. That figure was $138 million in FIX’s case. Dillard’s, Inc. (NYSE:DDS) is the most popular stock in this table. On the other hand Global Net Lease, Inc. (NYSE:GNL) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Comfort Systems USA, Inc. (NYSE:FIX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th and still beat the market by 4.2 percentage points. Unfortunately FIX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on FIX were disappointed as the stock returned -33.7% during the three months of 2020 (through April 6th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
