Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 13.5% in the fourth quarter. Seven out of 11 industry groups in the S&P 500 Index were down more than 20% from their 52-week highs at the trough of the stock market crash. The average return of a randomly picked stock in the index was even worse. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 15 most popular S&P 500 stocks among hedge funds not only recouped their Q4 losses but also outperformed the index by more than 3 percentage points. In this article, we will take a look at what hedge funds think about Forum Energy Technologies Inc (NYSE:FET).
Forum Energy Technologies Inc (NYSE:FET) has experienced an increase in enthusiasm from smart money in recent months. FET was in 11 hedge funds’ portfolios at the end of December. There were 9 hedge funds in our database with FET holdings at the end of the previous quarter. Our calculations also showed that FET isn’t among the 30 most popular stocks among hedge funds.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a gander at the key hedge fund action regarding Forum Energy Technologies Inc (NYSE:FET).
Hedge fund activity in Forum Energy Technologies Inc (NYSE:FET)
Heading into the first quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FET over the last 14 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Perella Weinberg Partners, managed by Daniel Arbess, holds the number one position in Forum Energy Technologies Inc (NYSE:FET). Perella Weinberg Partners has a $16.1 million position in the stock, comprising 1% of its 13F portfolio. On Perella Weinberg Partners’s heels is Millennium Management, led by Israel Englander, holding a $15.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions encompass Steve Cohen’s Point72 Asset Management, Ken Griffin’s Citadel Investment Group and Jim Simons’s Renaissance Technologies.
Now, key money managers have been driving this bullishness. Perella Weinberg Partners, managed by Daniel Arbess, initiated the most valuable position in Forum Energy Technologies Inc (NYSE:FET). Perella Weinberg Partners had $16.1 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also initiated a $1 million position during the quarter. The other funds with brand new FET positions are D. E. Shaw’s D E Shaw and Michael Platt and William Reeves’s BlueCrest Capital Mgmt..
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Forum Energy Technologies Inc (NYSE:FET) but similarly valued. We will take a look at Kezar Life Sciences, Inc. (NASDAQ:KZR), The Bancorp, Inc. (NASDAQ:TBBK), Gritstone Oncology, Inc. (NASDAQ:GRTS), and Covia Holdings Corporation (NYSE:CVIA). This group of stocks’ market valuations resemble FET’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KZR | 4 | 67447 | -3 |
| TBBK | 14 | 70000 | 1 |
| GRTS | 9 | 97302 | -6 |
| CVIA | 5 | 44983 | -2 |
| Average | 8 | 69933 | -2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $70 million. That figure was $53 million in FET’s case. The Bancorp, Inc. (NASDAQ:TBBK) is the most popular stock in this table. On the other hand Kezar Life Sciences, Inc. (NASDAQ:KZR) is the least popular one with only 4 bullish hedge fund positions. Forum Energy Technologies Inc (NYSE:FET) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on FET as the stock returned 28.6% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
