Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Formula One Group (NASDAQ:FWONA) to find out whether there were any major changes in hedge funds’ views.
Is FWONA a good stock to buy? Formula One Group (NASDAQ:FWONA) has seen a decrease in hedge fund sentiment lately. Formula One Group (NASDAQ:FWONA) was in 19 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 28. Our calculations also showed that FWONA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Hintze of CQS Cayman LP
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to take a look at the fresh hedge fund action encompassing Formula One Group (NASDAQ:FWONA).
Do Hedge Funds Think FWONA Is A Good Stock To Buy Now?
At Q1’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in FWONA a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Ancient Art (Teton Capital) held the most valuable stake in Formula One Group (NASDAQ:FWONA), which was worth $92.4 million at the end of the fourth quarter. On the second spot was Ashe Capital which amassed $45.7 million worth of shares. Kontiki Capital, Millennium Management, and CQS Cayman LP 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 Ancient Art (Teton Capital) allocated the biggest weight to Formula One Group (NASDAQ:FWONA), around 8.96% of its 13F portfolio. Ashe Capital is also relatively very bullish on the stock, designating 3.12 percent of its 13F equity portfolio to FWONA.
Due to the fact that Formula One Group (NASDAQ:FWONA) has experienced a decline in interest from the smart money, it’s easy to see that there is a sect of funds that slashed their full holdings last quarter. Interestingly, Mason Hawkins’s Southeastern Asset Management said goodbye to the biggest stake of all the hedgies monitored by Insider Monkey, worth an estimated $22.8 million in stock, and Parvinder Thiara’s Athanor Capital was right behind this move, as the fund dropped about $0.5 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 2 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Formula One Group (NASDAQ:FWONA) but similarly valued. These stocks are Apria, Inc. (NASDAQ:APR), Funko, Inc. (NASDAQ:FNKO), General American Investors Company, Inc. (NYSE:GAM), Talos Energy, Inc. (NYSE:TALO), Radius Health Inc (NASDAQ:RDUS), Ikena Oncology, Inc. (NASDAQ:IKNA), and Wabash National Corporation (NYSE:WNC). All of these stocks’ market caps resemble FWONA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| APR | 11 | 78178 | 11 |
| FNKO | 14 | 137414 | 5 |
| GAM | 4 | 33245 | 0 |
| TALO | 10 | 53220 | -4 |
| RDUS | 21 | 142038 | 2 |
| IKNA | 13 | 295677 | 13 |
| WNC | 14 | 87683 | 0 |
| Average | 12.4 | 118208 | 3.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $118 million. That figure was $235 million in FWONA’s case. Radius Health Inc (NASDAQ:RDUS) is the most popular stock in this table. On the other hand General American Investors Company, Inc. (NYSE:GAM) is the least popular one with only 4 bullish hedge fund positions. Formula One Group (NASDAQ:FWONA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FWONA is 67.5. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on FWONA, though not to the same extent, as the stock returned 10.4% since Q1 (through July 16th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
