The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded frontdoor, inc. (NASDAQ:FTDR) based on those filings.
frontdoor, inc. (NASDAQ:FTDR) shareholders have witnessed a decrease in hedge fund interest of late. frontdoor, inc. (NASDAQ:FTDR) was in 33 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 41. There were 36 hedge funds in our database with FTDR holdings at the end of March. Our calculations also showed that FTDR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David Brown of Hawk Ridge 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 take a look at the latest hedge fund action encompassing frontdoor, inc. (NASDAQ:FTDR).
Do Hedge Funds Think FTDR Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. On the other hand, there were a total of 41 hedge funds with a bullish position in FTDR a year ago. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds, Rima Senvest Management held the most valuable stake in frontdoor, inc. (NASDAQ:FTDR), which was worth $107.3 million at the end of the second quarter. On the second spot was Impactive Capital which amassed $89.9 million worth of shares. Iridian Asset Management, Renaissance Technologies, and Hawk Ridge 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 Billings Capital Management allocated the biggest weight to frontdoor, inc. (NASDAQ:FTDR), around 17.95% of its 13F portfolio. StackLine Partners is also relatively very bullish on the stock, designating 12.65 percent of its 13F equity portfolio to FTDR.
Judging by the fact that frontdoor, inc. (NASDAQ:FTDR) has experienced a decline in interest from hedge fund managers, we can see that there exists a select few money managers that elected to cut their entire stakes heading into Q3. It’s worth mentioning that Ken Griffin’s Citadel Investment Group said goodbye to the biggest stake of the 750 funds monitored by Insider Monkey, worth an estimated $8.8 million in stock, and Austin Wiggins Hopper’s AWH Capital was right behind this move, as the fund said goodbye to about $2.7 million worth. These moves are interesting, as aggregate hedge fund interest fell by 3 funds heading into Q3.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as frontdoor, inc. (NASDAQ:FTDR) but similarly valued. These stocks are Lions Gate Entertainment Corporation (NYSE:LGF-B), H&R Block, Inc. (NYSE:HRB), Adient plc (NYSE:ADNT), Balchem Corporation (NASDAQ:BCPC), JFrog Ltd. (NASDAQ:FROG), Radian Group Inc (NYSE:RDN), and Signet Jewelers Limited (NYSE:SIG). This group of stocks’ market valuations resemble FTDR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LGF-B | 22 | 518626 | -5 |
| HRB | 30 | 229563 | 3 |
| ADNT | 35 | 662444 | -4 |
| BCPC | 15 | 50095 | 1 |
| FROG | 12 | 251080 | -8 |
| RDN | 30 | 358639 | 0 |
| SIG | 33 | 1209048 | 7 |
| Average | 25.3 | 468499 | -0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.3 hedge funds with bullish positions and the average amount invested in these stocks was $468 million. That figure was $687 million in FTDR’s case. Adient plc (NYSE:ADNT) is the most popular stock in this table. On the other hand JFrog Ltd. (NASDAQ:FROG) is the least popular one with only 12 bullish hedge fund positions. frontdoor, inc. (NASDAQ:FTDR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FTDR is 71.8. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24.9% in 2021 through October 15th and beat the market again by 4.5 percentage points. Unfortunately FTDR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FTDR were disappointed as the stock returned -14.3% since the end of June (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
