Is FNV Stock A Buy or Sell?

In this article we will check out the progression of hedge fund sentiment towards Franco-Nevada Corporation (NYSE:FNV) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is FNV stock a buy? Franco-Nevada Corporation (NYSE:FNV) has seen a decrease in enthusiasm from smart money recently. Franco-Nevada Corporation (NYSE:FNV) was in 27 hedge funds’ portfolios at the end of December. The all time high for this statistic is 31. There were 31 hedge funds in our database with FNV holdings at the end of September. Our calculations also showed that FNV 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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).

Eric Sprott of Sprott 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. With all of this in mind let’s take a glance at the fresh hedge fund action regarding Franco-Nevada Corporation (NYSE:FNV).

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

At Q4’s end, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. On the other hand, there were a total of 24 hedge funds with a bullish position in FNV a year ago. 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 Franco-Nevada Corporation (NYSE:FNV), with a stake worth $694.6 million reported as of the end of December. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $172.5 million. Horizon Asset Management, D E Shaw, and Sprott Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Beddow Capital Management allocated the biggest weight to Franco-Nevada Corporation (NYSE:FNV), around 3.96% of its 13F portfolio. Forest Hill Capital is also relatively very bullish on the stock, earmarking 3.71 percent of its 13F equity portfolio to FNV.

Seeing as Franco-Nevada Corporation (NYSE:FNV) has faced bearish sentiment from hedge fund managers, it’s safe to say that there is a sect of money managers that slashed their full holdings last quarter. At the top of the heap, Daniel Lascano’s Lomas Capital Management sold off the largest investment of the “upper crust” of funds monitored by Insider Monkey, comprising close to $11.7 million in stock. Israel Englander’s fund, Millennium Management, also cut its stock, about $10.1 million worth. These moves are interesting, as total hedge fund interest dropped by 4 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Franco-Nevada Corporation (NYSE:FNV) but similarly valued. These stocks are Carnival Corporation (NYSE:CCL), Fortive Corporation (NYSE:FTV), Arthur J. Gallagher & Co. (NYSE:AJG), Edison International (NYSE:EIX), Maxim Integrated Products Inc. (NASDAQ:MXIM), Rogers Communications Inc. (NYSE:RCI), and Tyson Foods, Inc. (NYSE:TSN). All of these stocks’ market caps resemble FNV’s market cap.

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As you can see these stocks had an average of 34.4 hedge funds with bullish positions and the average amount invested in these stocks was $1127 million. That figure was $1224 million in FNV’s case. Maxim Integrated Products Inc. (NASDAQ:MXIM) is the most popular stock in this table. On the other hand Rogers Communications Inc. (NYSE:RCI) is the least popular one with only 15 bullish hedge fund positions. Franco-Nevada Corporation (NYSE:FNV) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FNV is 42.5. 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 negative signal and 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 12.3% in 2021 through April 19th and surpassed the market again by 0.9 percentage points. Unfortunately FNV wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); FNV investors were disappointed as the stock returned 9.4% since the end of December (through 4/19) 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 most of these stocks already outperformed the market in 2020.

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

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