We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Focus Financial Partners Inc. (NASDAQ:FOCS).
Is Focus Financial Partners Inc. (NASDAQ:FOCS) the right pick for your portfolio? Money managers are betting on the stock. The number of bullish hedge fund bets went up by 1 recently. Our calculations also showed that FOCS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). FOCS was in 10 hedge funds’ portfolios at the end of the third quarter of 2019. There were 9 hedge funds in our database with FOCS 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.
In the financial world there are a large number of formulas shareholders employ to size up stocks. Two of the less known formulas are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the best money managers can outperform the S&P 500 by a significant amount (see the details here).
Paul Marshall of Marshall Wace
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a glance at the key hedge fund action regarding Focus Financial Partners Inc. (NASDAQ:FOCS).
Hedge fund activity in Focus Financial Partners Inc. (NASDAQ:FOCS)
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from the second quarter of 2019. By comparison, 12 hedge funds held shares or bullish call options in FOCS a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
The largest stake in Focus Financial Partners Inc. (NASDAQ:FOCS) was held by Centerbridge Partners, which reported holding $21.5 million worth of stock at the end of September. It was followed by Marshall Wace with a $8 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Centerbridge Partners allocated the biggest weight to Focus Financial Partners Inc. (NASDAQ:FOCS), around 3.9% of its 13F portfolio. Marshall Wace is also relatively very bullish on the stock, earmarking 0.06 percent of its 13F equity portfolio to FOCS.
Now, specific money managers were breaking ground themselves. ExodusPoint Capital, managed by Michael Gelband, initiated the largest position in Focus Financial Partners Inc. (NASDAQ:FOCS). ExodusPoint Capital had $0.2 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also initiated a $0.1 million position during the quarter.
Let’s now review hedge fund activity in other stocks similar to Focus Financial Partners Inc. (NASDAQ:FOCS). We will take a look at Fresh Del Monte Produce Inc (NYSE:FDP), Global Net Lease, Inc. (NYSE:GNL), Dillard’s, Inc. (NYSE:DDS), and Mobile Mini Inc (NASDAQ:MINI). This group of stocks’ market caps are similar to FOCS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FDP | 11 | 53395 | 0 |
| GNL | 12 | 74097 | 4 |
| DDS | 20 | 266166 | 0 |
| MINI | 20 | 194376 | 5 |
| Average | 15.75 | 147009 | 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 $147 million. That figure was $44 million in FOCS’s case. Dillard’s, Inc. (NYSE:DDS) is the most popular stock in this table. On the other hand Fresh Del Monte Produce Inc (NYSE:FDP) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Focus Financial Partners Inc. (NASDAQ:FOCS) is even less popular than FDP. Hedge funds clearly dropped the ball on FOCS 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on FOCS as the stock returned 18.1% during the fourth quarter (through the end of November) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
