Is FDS Stock A Buy or Sell?

The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards FactSet Research Systems Inc. (NYSE:FDS).

Is FDS stock a buy? FactSet Research Systems Inc. (NYSE:FDS) investors should be aware of an increase in support from the world’s most elite money managers of late. FactSet Research Systems Inc. (NYSE:FDS) was in 30 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 29 hedge funds in our database with FDS positions at the end of the third quarter. Our calculations also showed that FDS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Tom Gayner of Markel Gayner Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind we’re going to analyze the fresh hedge fund action regarding FactSet Research Systems Inc. (NYSE:FDS).

Do Hedge Funds Think FDS Is A Good Stock To Buy Now?

At Q4’s end, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FDS over the last 22 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.

The largest stake in FactSet Research Systems Inc. (NYSE:FDS) was held by Echo Street Capital Management, which reported holding $115.4 million worth of stock at the end of December. It was followed by Markel Gayner Asset Management with a $38.8 million position. Other investors bullish on the company included Renaissance Technologies, Arrowstreet Capital, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Prana Capital Management allocated the biggest weight to FactSet Research Systems Inc. (NYSE:FDS), around 2.01% of its 13F portfolio. Echo Street Capital Management is also relatively very bullish on the stock, earmarking 1.16 percent of its 13F equity portfolio to FDS.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into FactSet Research Systems Inc. (NYSE:FDS) headfirst. Prana Capital Management, managed by Peter Seuss, initiated the biggest position in FactSet Research Systems Inc. (NYSE:FDS). Prana Capital Management had $15.4 million invested in the company at the end of the quarter. Schonfeld Strategic Advisors also made a $11.1 million investment in the stock during the quarter. The following funds were also among the new FDS investors: Donald Sussman’s Paloma Partners, Jinghua Yan’s TwinBeech Capital, and Dmitry Balyasny’s Balyasny Asset Management.

Let’s go over hedge fund activity in other stocks similar to FactSet Research Systems Inc. (NYSE:FDS). We will take a look at China Southern Airlines Co Ltd (NYSE:ZNH), Molina Healthcare, Inc. (NYSE:MOH), Evergy, Inc. (NYSE:EVRG), Nuance Communications Inc. (NASDAQ:NUAN), Enel Americas S.A. (NYSE:ENIA), ASE Technology Holding Co., Ltd. (NYSE:ASX), and Charles River Laboratories International Inc. (NYSE:CRL). This group of stocks’ market values resemble FDS’s market value.

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As you can see these stocks had an average of 26.3 hedge funds with bullish positions and the average amount invested in these stocks was $1277 million. That figure was $311 million in FDS’s case. Nuance Communications Inc. (NASDAQ:NUAN) is the most popular stock in this table. On the other hand China Southern Airlines Co Ltd (NYSE:ZNH) is the least popular one with only 3 bullish hedge fund positions. FactSet Research Systems Inc. (NYSE:FDS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FDS is 59.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and beat the market again by 1.5 percentage points. Unfortunately FDS wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on FDS were disappointed as the stock returned -6.1% since the end of December (through 4/12) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.