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 FactSet Research Systems Inc. (NYSE:FDS).
Hedge fund interest in FactSet Research Systems Inc. (NYSE:FDS) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare FDS to other stocks including National Retail Properties, Inc. (NYSE:NNN), Formula One Group (NASDAQ:FWONA), and DaVita Inc (NYSE:DVA) to get a better sense of its popularity.
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 methods investors employ to assess their holdings. A couple of the most under-the-radar methods are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the top money managers can beat their index-focused peers by a solid amount (see the details here).
Tom Gayner of Markel Gayner Asset Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to go over the fresh hedge fund action encompassing FactSet Research Systems Inc. (NYSE:FDS).
How have hedgies been trading FactSet Research Systems Inc. (NYSE:FDS)?
At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FDS over the last 17 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
The largest stake in FactSet Research Systems Inc. (NYSE:FDS) was held by Renaissance Technologies, which reported holding $77.1 million worth of stock at the end of September. It was followed by GLG Partners with a $72.7 million position. Other investors bullish on the company included Markel Gayner Asset Management, Echo Street Capital Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Markel Gayner Asset Management allocated the biggest weight to FactSet Research Systems Inc. (NYSE:FDS), around 0.43% of its 13F portfolio. Echo Street Capital Management is also relatively very bullish on the stock, setting aside 0.4 percent of its 13F equity portfolio to FDS.
Due to the fact that FactSet Research Systems Inc. (NYSE:FDS) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedgies that decided to sell off their positions entirely heading into Q4. At the top of the heap, Renee Yao’s Neo Ivy Capital dropped the largest stake of the 750 funds watched by Insider Monkey, valued at close to $1.4 million in stock, and Matthew Tewksbury’s Stevens Capital Management was right behind this move, as the fund dumped about $0.8 million worth. These transactions are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as FactSet Research Systems Inc. (NYSE:FDS) but similarly valued. We will take a look at National Retail Properties, Inc. (NYSE:NNN), Formula One Group (NASDAQ:FWONA), DaVita Inc (NYSE:DVA), and Vail Resorts, Inc. (NYSE:MTN). This group of stocks’ market valuations are similar to FDS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NNN | 20 | 275561 | 4 |
| FWONA | 19 | 371712 | 1 |
| DVA | 34 | 3079581 | -2 |
| MTN | 35 | 478623 | 2 |
| Average | 27 | 1051369 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $1051 million. That figure was $262 million in FDS’s case. Vail Resorts, Inc. (NYSE:MTN) is the most popular stock in this table. On the other hand Formula One Group (NASDAQ:FWONA) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks FactSet Research Systems Inc. (NYSE:FDS) is even less popular than FWONA. 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 FDS, though not to the same extent, as the stock returned 7.2% during the fourth quarter (through 11/30) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
