How do we determine whether Franco-Nevada Corporation (NYSE:FNV) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
Is Franco-Nevada Corporation (NYSE:FNV) a marvelous stock to buy now? The smart money is in an optimistic mood. The number of bullish hedge fund bets inched up by 4 recently. Our calculations also showed that FNV isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are a large number of methods stock market investors have at their disposal to appraise their holdings. Two 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 best money managers can outclass the market by a healthy margin (see the details here).
John Overdeck of Two Sigma Advisors
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 new hedge fund action encompassing Franco-Nevada Corporation (NYSE:FNV).
What does smart money think about Franco-Nevada Corporation (NYSE:FNV)?
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards FNV over the last 17 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 Franco-Nevada Corporation (NYSE:FNV), with a stake worth $401.8 million reported as of the end of September. Trailing Renaissance Technologies was Horizon Asset Management, which amassed a stake valued at $103.6 million. GLG Partners, Waratah Capital Advisors, and Citadel Investment Group 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 Waratah Capital Advisors allocated the biggest weight to Franco-Nevada Corporation (NYSE:FNV), around 4.08% of its 13F portfolio. Horizon Asset Management is also relatively very bullish on the stock, dishing out 3.12 percent of its 13F equity portfolio to FNV.
As industrywide interest jumped, some big names were leading the bulls’ herd. Waratah Capital Advisors, managed by Brad Dunkley and Blair Levinsky, created the most outsized position in Franco-Nevada Corporation (NYSE:FNV). Waratah Capital Advisors had $40.6 million invested in the company at the end of the quarter. Ed Beddow and William Tichy’s Beddow Capital Management also initiated a $2 million position during the quarter. The following funds were also among the new FNV investors: Joel Greenblatt’s Gotham Asset Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Donald Sussman’s Paloma Partners.
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. We will take a look at Yum China Holdings, Inc. (NYSE:YUMC), Martin Marietta Materials, Inc. (NYSE:MLM), Omnicom Group Inc. (NYSE:OMC), and Arch Capital Group Ltd. (NASDAQ:ACGL). This group of stocks’ market valuations resemble FNV’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| YUMC | 29 | 465970 | 1 |
| MLM | 40 | 2550137 | 0 |
| OMC | 24 | 478571 | 1 |
| ACGL | 21 | 1306954 | -2 |
| Average | 28.5 | 1200408 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $1200 million. That figure was $751 million in FNV’s case. Martin Marietta Materials, Inc. (NYSE:MLM) is the most popular stock in this table. On the other hand Arch Capital Group Ltd. (NASDAQ:ACGL) is the least popular one with only 21 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 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 FNV, though not to the same extent, as the stock returned 7.9% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
