In this article we are going to use hedge fund sentiment as a tool and determine whether FleetCor Technologies, Inc. (NYSE:FLT) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
FleetCor Technologies, Inc. (NYSE:FLT) has experienced a decrease in enthusiasm from smart money of late. FleetCor Technologies, Inc. (NYSE:FLT) was in 31 hedge funds’ portfolios at the end of September. The all time high for this statistic is 60. There were 40 hedge funds in our database with FLT positions at the end of the second quarter. Our calculations also showed that FLT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
William Gray of Orbis Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a glance at the new hedge fund action encompassing FleetCor Technologies, Inc. (NYSE:FLT).
Do Hedge Funds Think FLT Is A Good Stock To Buy Now?
At the end of September, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -23% from the previous quarter. By comparison, 40 hedge funds held shares or bullish call options in FLT a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Among these funds, Viking Global held the most valuable stake in FleetCor Technologies, Inc. (NYSE:FLT), which was worth $645 million at the end of the third quarter. On the second spot was Orbis Investment Management which amassed $528.9 million worth of shares. Tiger Global Management LLC, Citadel Investment Group, and Maverick Capital 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 Incline Global Management allocated the biggest weight to FleetCor Technologies, Inc. (NYSE:FLT), around 6.03% of its 13F portfolio. Birch Run Capital is also relatively very bullish on the stock, dishing out 5.85 percent of its 13F equity portfolio to FLT.
Due to the fact that FleetCor Technologies, Inc. (NYSE:FLT) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers that elected to cut their positions entirely heading into Q4. Interestingly, Robert Pitts’s Steadfast Capital Management sold off the largest stake of the 750 funds followed by Insider Monkey, comprising about $56 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund dropped about $20.3 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 9 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to FleetCor Technologies, Inc. (NYSE:FLT). We will take a look at Dollar Tree, Inc. (NASDAQ:DLTR), TransUnion (NYSE:TRU), Mid America Apartment Communities Inc (NYSE:MAA), PPL Corporation (NYSE:PPL), Sun Communities Inc (NYSE:SUI), Martin Marietta Materials, Inc. (NYSE:MLM), and Fox Corporation (NASDAQ:FOX). This group of stocks’ market caps are closest to FLT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DLTR | 38 | 1215394 | -4 |
| TRU | 38 | 2180644 | 3 |
| MAA | 22 | 254912 | 8 |
| PPL | 20 | 140767 | -3 |
| SUI | 33 | 794559 | 3 |
| MLM | 42 | 2154281 | 8 |
| FOX | 25 | 665945 | 0 |
| Average | 31.1 | 1058072 | 2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.1 hedge funds with bullish positions and the average amount invested in these stocks was $1058 million. That figure was $2096 million in FLT’s case. Martin Marietta Materials, Inc. (NYSE:MLM) is the most popular stock in this table. On the other hand PPL Corporation (NYSE:PPL) is the least popular one with only 20 bullish hedge fund positions. FleetCor Technologies, Inc. (NYSE:FLT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FLT is 36.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately FLT wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); FLT investors were disappointed as the stock returned -20.7% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
