We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Four Corners Property Trust, Inc. (NYSE:FCPT) based on that data.
Is Four Corners Property Trust, Inc. (NYSE:FCPT) the right investment to pursue these days? Prominent investors are reducing their bets on the stock. The number of long hedge fund bets were trimmed by 1 lately. Our calculations also showed that FCPT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). FCPT was in 14 hedge funds’ portfolios at the end of March. There were 15 hedge funds in our database with FCPT positions at the end of the previous quarter.
Video: 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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Cliff Asness of AQR Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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. Now we’re going to take a peek at the latest hedge fund action regarding Four Corners Property Trust, Inc. (NYSE:FCPT).
What does smart money think about Four Corners Property Trust, Inc. (NYSE:FCPT)?
Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in FCPT a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Waterfront Capital Partners, managed by Eduardo Abush, holds the largest position in Four Corners Property Trust, Inc. (NYSE:FCPT). Waterfront Capital Partners has a $19.4 million position in the stock, comprising 2.4% of its 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $6.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions encompass Jed Nussdorf’s Soapstone Capital, D. E. Shaw’s D E Shaw and Paul Marshall and Ian Wace’s Marshall Wace LLP. In terms of the portfolio weights assigned to each position Soapstone Capital allocated the biggest weight to Four Corners Property Trust, Inc. (NYSE:FCPT), around 4.61% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, designating 2.38 percent of its 13F equity portfolio to FCPT.
Judging by the fact that Four Corners Property Trust, Inc. (NYSE:FCPT) has witnessed bearish sentiment from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of funds that decided to sell off their entire stakes heading into Q4. It’s worth mentioning that Greg Poole’s Echo Street Capital Management sold off the biggest investment of all the hedgies followed by Insider Monkey, valued at an estimated $13.4 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund cut about $11.8 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 1 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Four Corners Property Trust, Inc. (NYSE:FCPT). We will take a look at Sogou Inc. (NYSE:SOGO), Cavco Industries, Inc. (NASDAQ:CVCO), Edgewell Personal Care Company (NYSE:EPC), and BioTelemetry, Inc. (NASDAQ:BEAT). This group of stocks’ market valuations are similar to FCPT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SOGO | 6 | 9617 | -5 |
| CVCO | 20 | 122025 | 0 |
| EPC | 25 | 176671 | -1 |
| BEAT | 12 | 42629 | -3 |
| Average | 15.75 | 87736 | -2.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $54 million in FCPT’s case. Edgewell Personal Care Company (NYSE:EPC) is the most popular stock in this table. On the other hand Sogou Inc. (NYSE:SOGO) is the least popular one with only 6 bullish hedge fund positions. Four Corners Property Trust, Inc. (NYSE:FCPT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. A small number of hedge funds were also right about betting on FCPT as the stock returned 27.8% during the second quarter and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
