Here is What Hedge Funds Think About Falcon Minerals Corporation (FLMN)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Falcon Minerals Corporation (NASDAQ:FLMN) based on that data.

Is Falcon Minerals Corporation (NASDAQ:FLMN) a buy here? The smart money was becoming more confident. The number of bullish hedge fund bets moved up by 4 recently. Falcon Minerals Corporation (NASDAQ:FLMN) was in 25 hedge funds’ portfolios at the end of June. The all time high for this statistic is 26. Our calculations also showed that FLMN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 21 hedge funds in our database with FLMN positions at the end of the first quarter.

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Leon Cooperman of Omega Advisors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a look at the latest hedge fund action regarding Falcon Minerals Corporation (NASDAQ:FLMN).

Do Hedge Funds Think FLMN Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the previous quarter. On the other hand, there were a total of 21 hedge funds with a bullish position in FLMN a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Falcon Minerals Corporation (NASDAQ:FLMN) was held by Nantahala Capital Management, which reported holding $13.3 million worth of stock at the end of June. It was followed by Omega Advisors with a $8.3 million position. Other investors bullish on the company included Samlyn Capital, Renaissance Technologies, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Omega Advisors allocated the biggest weight to Falcon Minerals Corporation (NASDAQ:FLMN), around 0.47% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, setting aside 0.38 percent of its 13F equity portfolio to FLMN.

Consequently, some big names have been driving this bullishness. Manatuck Hill Partners, managed by Mark Broach, assembled the most valuable position in Falcon Minerals Corporation (NASDAQ:FLMN). Manatuck Hill Partners had $0.9 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.2 million position during the quarter. The following funds were also among the new FLMN investors: Donald Sussman’s Paloma Partners, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Cliff Asness’s AQR Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Falcon Minerals Corporation (NASDAQ:FLMN) but similarly valued. These stocks are Ooma Inc (NYSE:OOMA), Equity Bancshares, Inc. (NASDAQ:EQBK), Safe Bulkers, Inc. (NYSE:SB), Amryt Pharma plc (NASDAQ:AMYT), Capital City Bank Group, Inc. (NASDAQ:CCBG), Pulse Biosciences, Inc (NASDAQ:PLSE), and Universal Insurance Holdings, Inc. (NYSE:UVE). All of these stocks’ market caps match FLMN’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.4 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $43 million in FLMN’s case. Ooma Inc (NYSE:OOMA) is the most popular stock in this table. On the other hand Pulse Biosciences, Inc (NASDAQ:PLSE) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Falcon Minerals Corporation (NASDAQ:FLMN) is more popular among hedge funds. Our overall hedge fund sentiment score for FLMN is 87.8. 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. 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 returned 24% in 2021 through October 22nd but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on FLMN as the stock returned 21% since the end of June (through 10/22) 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.

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Disclosure: None. This article was originally published at Insider Monkey.