We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Fresenius Medical Care AG & Co. (NYSE:FMS).
Is Fresenius Medical Care AG & Co. (NYSE:FMS) a buy here? The best stock pickers are becoming hopeful. The number of long hedge fund bets inched up by 6 recently. Our calculations also showed that FMS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). FMS was in 11 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 5 hedge funds in our database with FMS holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 was able to identify in advance a select group of hedge fund holdings that 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.
Matthew Hulsizer of PEAK6 Capital
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. 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. With all of this in mind we’re going to take a look at the fresh hedge fund action regarding Fresenius Medical Care AG & Co. (NYSE:FMS).
What have hedge funds been doing with Fresenius Medical Care AG & Co. (NYSE:FMS)?
Heading into the first quarter of 2020, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 120% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FMS over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Marshall Wace LLP held the most valuable stake in Fresenius Medical Care AG & Co. (NYSE:FMS), which was worth $3.8 million at the end of the third quarter. On the second spot was D E Shaw which amassed $2.8 million worth of shares. Millennium Management, Citadel Investment Group, and PEAK6 Capital 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 Stevens Capital Management allocated the biggest weight to Fresenius Medical Care AG & Co. (NYSE:FMS), around 0.03% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, dishing out 0.03 percent of its 13F equity portfolio to FMS.
Now, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, created the biggest position in Fresenius Medical Care AG & Co. (NYSE:FMS). Millennium Management had $2.4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $2.2 million position during the quarter. The other funds with brand new FMS positions are John Overdeck and David Siegel’s Two Sigma Advisors, Matthew Tewksbury’s Stevens Capital Management, and Michael Gelband’s ExodusPoint Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Fresenius Medical Care AG & Co. (NYSE:FMS) but similarly valued. We will take a look at Corteva, Inc. (NYSE:CTVA), ANSYS, Inc. (NASDAQ:ANSS), Align Technology, Inc. (NASDAQ:ALGN), and CoStar Group Inc (NASDAQ:CSGP). This group of stocks’ market caps match FMS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CTVA | 27 | 676056 | -10 |
| ANSS | 33 | 1348315 | 0 |
| ALGN | 40 | 2552526 | 1 |
| CSGP | 44 | 1729509 | 5 |
| Average | 36 | 1576602 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $1577 million. That figure was $13 million in FMS’s case. CoStar Group Inc (NASDAQ:CSGP) is the most popular stock in this table. On the other hand Corteva, Inc. (NYSE:CTVA) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks Fresenius Medical Care AG & Co. (NYSE:FMS) is even less popular than CTVA. Hedge funds clearly dropped the ball on FMS as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 11.7% in 2020 through March 11th but still beat the market by 3.1 percentage points. A small number of hedge funds were also right about betting on FMS as the stock returned -3.8% during the same time period and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
