Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Fitbit Inc (NYSE:FIT) investors should be aware of an increase in activity from the world’s largest hedge funds recently. FIT was in 35 hedge funds’ portfolios at the end of the third quarter of 2016. There were 29 hedge funds in our database with FIT positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Tenneco Inc (NYSE:TEN), RR Donnelley & Sons Co (NASDAQ:RRD), and Finisar Corporation (NASDAQ:FNSR) to gather more data points.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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What does the smart money think about Fitbit Inc (NYSE:FIT)?
At Q3’s end, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a rise of 21% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FIT over the last 5 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Odey Asset Management Group, led by Crispin Odey, holds the most valuable position in Fitbit Inc (NYSE:FIT). Odey Asset Management Group has a $75.3 million position in the stock, comprising 5.4% of its 13F portfolio. The second most bullish fund manager is Karthik Sarma of SRS Investment Management, with a $59.5 million position; 1.6% of its 13F portfolio is allocated to the stock. Other peers that are bullish encompass Philippe Laffont’s Coatue Management and Jim Simons’ Renaissance Technologies. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As one would reasonably expect, key money managers have jumped into Fitbit Inc (NYSE:FIT) headfirst. OZ Management established the most valuable call position in Fitbit Inc (NYSE:FIT). OZ Management had $54.5 million invested in the company at the end of the quarter. Adam Wolfberg and Steven Landry’s EastBay Asset Management also initiated a $23.7 million position during the quarter. The following funds were also among the new FIT investors: Paul Tudor Jones’ Tudor Investment Corp, Ken Griffin’s Citadel Investment Group, and Benjamin A. Smith’s Laurion Capital Management.
Let’s now review hedge fund activity in other stocks similar to Fitbit Inc (NYSE:FIT). These stocks are Tenneco Inc (NYSE:TEN), RR Donnelley & Sons Co (NASDAQ:RRD), Finisar Corporation (NASDAQ:FNSR), and American National Insurance Company (NASDAQ:ANAT). All of these stocks’ market caps match FIT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TEN | 24 | 201461 | -3 |
| RRD | 24 | 131702 | -1 |
| FNSR | 22 | 417786 | 1 |
| ANAT | 13 | 30379 | 3 |
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $195 million. That figure was $443 million in FIT’s case. Tenneco Inc (NYSE:TEN) is the most popular stock in this table. On the other hand American National Insurance Company (NASDAQ:ANAT) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Fitbit Inc (NYSE:FIT) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
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