After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Floor & Decor Holdings, Inc. (NYSE:FND).
Is Floor & Decor Holdings, Inc. (NYSE:FND) undervalued? Money managers are getting more bullish. The number of long hedge fund positions increased by 12 lately. Our calculations also showed that fnd isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Marshall of Marshall Wace
Let’s review the recent hedge fund action regarding Floor & Decor Holdings, Inc. (NYSE:FND).
What does the smart money think about Floor & Decor Holdings, Inc. (NYSE:FND)?
At Q1’s end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 63% from the fourth quarter of 2018. On the other hand, there were a total of 17 hedge funds with a bullish position in FND a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Floor & Decor Holdings, Inc. (NYSE:FND) was held by Joho Capital, which reported holding $172.8 million worth of stock at the end of March. It was followed by Two Creeks Capital Management with a $50 million position. Other investors bullish on the company included Hound Partners, Marshall Wace LLP, and Ogborne Capital.
As aggregate interest increased, some big names were leading the bulls’ herd. Two Creeks Capital Management, managed by Ryan Pedlow, established the biggest position in Floor & Decor Holdings, Inc. (NYSE:FND). Two Creeks Capital Management had $50 million invested in the company at the end of the quarter. Jonathan Auerbach’s Hound Partners also initiated a $36.2 million position during the quarter. The other funds with brand new FND positions are Lee Ainslie’s Maverick Capital, Jay Genzer’s Thames Capital Management, and Peter S. Park’s Park West Asset Management.
Let’s check out hedge fund activity in other stocks similar to Floor & Decor Holdings, Inc. (NYSE:FND). These stocks are Healthcare Realty Trust Inc (NYSE:HR), Hutchison China MediTech Limited (NASDAQ:HCM), Clean Harbors Inc (NYSE:CLH), and MSA Safety Incorporated (NYSE:MSA). This group of stocks’ market caps match FND’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HR | 14 | 80226 | 5 |
| HCM | 6 | 8123 | 1 |
| CLH | 27 | 417279 | 4 |
| MSA | 17 | 103105 | 0 |
| Average | 16 | 152183 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $152 million. That figure was $406 million in FND’s case. Clean Harbors Inc (NYSE:CLH) is the most popular stock in this table. On the other hand Hutchison China MediTech Limited (NASDAQ:HCM) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Floor & Decor Holdings, Inc. (NYSE:FND) 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. Unfortunately FND wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on FND were disappointed as the stock returned -11% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
