Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of FutureFuel Corp. (NYSE:FF).
FutureFuel Corp. (NYSE:FF) has experienced a decrease in hedge fund interest recently. Our calculations also showed that FF isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 40 percentage points since May 2014 through May 30, 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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to review the new hedge fund action surrounding FutureFuel Corp. (NYSE:FF).
What have hedge funds been doing with FutureFuel Corp. (NYSE:FF)?
At the end of the second quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of -27% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FF over the last 16 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of FutureFuel Corp. (NYSE:FF), with a stake worth $26 million reported as of the end of March. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $9.1 million. GLG Partners, Arrowstreet Capital, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Judging by the fact that FutureFuel Corp. (NYSE:FF) has experienced a decline in interest from hedge fund managers, we can see that there was a specific group of money managers that slashed their entire stakes in the second quarter. Interestingly, Jeffrey Talpins’s Element Capital Management said goodbye to the largest investment of all the hedgies watched by Insider Monkey, totaling close to $0.4 million in stock, and Joel Greenblatt’s Gotham Asset Management was right behind this move, as the fund said goodbye to about $0.4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds in the second quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as FutureFuel Corp. (NYSE:FF) but similarly valued. These stocks are LAIX Inc. (NYSE:LAIX), First Community Bankshares, Inc.(NASDAQ:FCBC), Capitol Investment Corp. IV (NYSE:CIC), and Unisys Corporation (NYSE:UIS). All of these stocks’ market caps resemble FF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LAIX | 2 | 2144 | 0 |
| FCBC | 3 | 9257 | -1 |
| CIC | 18 | 178758 | 3 |
| UIS | 16 | 46092 | -3 |
| Average | 9.75 | 59063 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $47 million in FF’s case. Capitol Investment Corp. IV (NYSE:CIC) is the most popular stock in this table. On the other hand LAIX Inc. (NYSE:LAIX) is the least popular one with only 2 bullish hedge fund positions. FutureFuel Corp. (NYSE:FF) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on FF, though not to the same extent, as the stock returned 2.7% during the third quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
