Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That’s why we pay special attention to hedge fund activity in these stocks.
Frank’s International NV (NYSE:FI) investors should pay attention to an increase in hedge fund interest recently. FI was in 15 hedge funds’ portfolios at the end of the second quarter of 2019. There were 12 hedge funds in our database with FI holdings at the end of the previous quarter. Our calculations also showed that FI isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are a large number of indicators investors employ to evaluate stocks. A pair of the most under-the-radar indicators are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the elite fund managers can outclass the broader indices by a healthy margin (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to review the fresh hedge fund action surrounding Frank’s International NV (NYSE:FI).
Hedge fund activity in Frank’s International NV (NYSE:FI)
Heading into the third quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 25% from the previous quarter. By comparison, 5 hedge funds held shares or bullish call options in FI a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, First Pacific Advisors LLC was the largest shareholder of Frank’s International NV (NYSE:FI), with a stake worth $5 million reported as of the end of March. Trailing First Pacific Advisors LLC was Millennium Management, which amassed a stake valued at $4.4 million. Adage Capital Management, Balyasny Asset Management, and Marshall Wace LLP were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, key money managers were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, established the most outsized position in Frank’s International NV (NYSE:FI). Balyasny Asset Management had $3.9 million invested in the company at the end of the quarter. Josh Donfeld and David Rogers’s Castle Hook Partners also made a $0.9 million investment in the stock during the quarter. The following funds were also among the new FI investors: Simon Sadler’s Segantii Capital, Dan Loeb’s Third Point, and Minhua Zhang’s Weld Capital Management.
Let’s now review hedge fund activity in other stocks similar to Frank’s International NV (NYSE:FI). These stocks are IMAX Corporation (NYSE:IMAX), Denny’s Corporation (NASDAQ:DENN), Victory Capital Holdings, Inc. (NASDAQ:VCTR), and City Holding Company (NASDAQ:CHCO). This group of stocks’ market values are closest to FI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IMAX | 12 | 44044 | -3 |
| DENN | 17 | 196803 | -2 |
| VCTR | 12 | 68237 | -1 |
| CHCO | 11 | 19024 | 3 |
| Average | 13 | 82027 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $82 million. That figure was $27 million in FI’s case. Denny’s Corporation (NASDAQ:DENN) is the most popular stock in this table. On the other hand City Holding Company (NASDAQ:CHCO) is the least popular one with only 11 bullish hedge fund positions. Frank’s International NV (NYSE:FI) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately FI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on FI were disappointed as the stock returned -13% during the third quarter 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
