Is frontdoor, inc. (FTDR) A Good Stock To Buy?

The Insider Monkey team has completed processing the quarterly 13F filings for the September 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 frontdoor, inc. (NASDAQ:FTDR).

Is frontdoor, inc. (FTDR) a buy right now? Investors who are in the know were taking a bullish view. The number of bullish hedge fund bets increased by 3 in recent months. frontdoor, inc. (NASDAQ:FTDR) was in 36 hedge funds’ portfolios at the end of September. The all time high for this statistic is 41. Our calculations also showed that FTDR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Jim Simons of Renaissance Technologies

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. With all of this in mind we’re going to view the latest hedge fund action surrounding frontdoor, inc. (NASDAQ:FTDR).

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

At the end of the third quarter, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FTDR over the last 25 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

The largest stake in frontdoor, inc. (NASDAQ:FTDR) was held by Rima Senvest Management, which reported holding $105.4 million worth of stock at the end of September. It was followed by Impactive Capital with a $94 million position. Other investors bullish on the company included Renaissance Technologies, Hawk Ridge Management, and StackLine Partners. In terms of the portfolio weights assigned to each position StackLine Partners allocated the biggest weight to frontdoor, inc. (NASDAQ:FTDR), around 16.05% of its 13F portfolio. Billings Capital Management is also relatively very bullish on the stock, setting aside 15.8 percent of its 13F equity portfolio to FTDR.

As one would reasonably expect, some big names have been driving this bullishness. Highside Global Management, managed by Zach Petrone, established the most outsized position in frontdoor, inc. (NASDAQ:FTDR). Highside Global Management had $9.2 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $4.3 million investment in the stock during the quarter. The following funds were also among the new FTDR investors: Donald Sussman’s Paloma Partners, Jinghua Yan’s TwinBeech Capital, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as frontdoor, inc. (NASDAQ:FTDR) but similarly valued. These stocks are Apple Hospitality REIT Inc (NYSE:APLE), Altra Industrial Motion Corp. (NASDAQ:AIMC), Box, Inc. (NYSE:BOX), Resideo Technologies, Inc. (NYSE:REZI), Enact Holdings Inc. (NASDAQ:ACT), Macquarie Infrastructure Corporation (NYSE:MIC), and Academy Sports and Outdoors, Inc. (NASDAQ:ASO). This group of stocks’ market valuations are similar to FTDR’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.6 hedge funds with bullish positions and the average amount invested in these stocks was $472 million. That figure was $574 million in FTDR’s case. Academy Sports and Outdoors, Inc. (NASDAQ:ASO) is the most popular stock in this table. On the other hand Altra Industrial Motion Corp. (NASDAQ:AIMC) is the least popular one with only 14 bullish hedge fund positions. frontdoor, inc. (NASDAQ:FTDR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FTDR is 66.7. 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 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 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately FTDR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FTDR were disappointed as the stock returned -17.5% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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

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