We can judge whether Fidelity National Information Services Inc. (NYSE:FIS) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Fidelity National Information Services Inc. (NYSE:FIS) investors should pay attention to an increase in enthusiasm from smart money of late. Our calculations also showed that FIS isn’t among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to analyze the fresh hedge fund action encompassing Fidelity National Information Services Inc. (NYSE:FIS).
How are hedge funds trading Fidelity National Information Services Inc. (NYSE:FIS)?
At the end of the first quarter, a total of 55 of the hedge funds tracked by Insider Monkey were long this stock, a change of 49% from the fourth quarter of 2018. On the other hand, there were a total of 34 hedge funds with a bullish position in FIS a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Cantillon Capital Management was the largest shareholder of Fidelity National Information Services Inc. (NYSE:FIS), with a stake worth $482 million reported as of the end of March. Trailing Cantillon Capital Management was D E Shaw, which amassed a stake valued at $453 million. Two Sigma Advisors, Citadel Investment Group, and Farallon Capital were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Renaissance Technologies, managed by Jim Simons, created the most outsized position in Fidelity National Information Services Inc. (NYSE:FIS). Renaissance Technologies had $219.2 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $210.2 million position during the quarter. The other funds with new positions in the stock are Gabriel Plotkin’s Melvin Capital Management, Leon Shaulov’s Maplelane Capital, and James Parsons’s Junto Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Fidelity National Information Services Inc. (NYSE:FIS) but similarly valued. These stocks are The Travelers Companies Inc (NYSE:TRV), Humana Inc (NYSE:HUM), Carnival plc (NYSE:CUK), and BB&T Corporation (NYSE:BBT). This group of stocks’ market valuations are similar to FIS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRV | 29 | 1262157 | 0 |
| HUM | 42 | 3053077 | -4 |
| CUK | 8 | 70177 | 0 |
| BBT | 30 | 222399 | -1 |
| Average | 27.25 | 1151953 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $1152 million. That figure was $3479 million in FIS’s case. Humana Inc (NYSE:HUM) is the most popular stock in this table. On the other hand Carnival plc (NYSE:CUK) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Fidelity National Information Services Inc. (NYSE:FIS) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on FIS as the stock returned 5.7% during the same period and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
