Is FTI Stock A Buy or Sell?

With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was TechnipFMC plc (NYSE:FTI).

Is FTI stock a buy? Investors who are in the know were in a bullish mood. The number of bullish hedge fund positions inched up by 4 lately. TechnipFMC plc (NYSE:FTI) was in 35 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 42. Our calculations also showed that FTI 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).

Donald Sussman of Paloma Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy 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 take a look at the fresh hedge fund action surrounding TechnipFMC plc (NYSE:FTI).

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

At fourth quarter’s end, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the previous quarter. By comparison, 34 hedge funds held shares or bullish call options in FTI a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

More specifically, Pzena Investment Management was the largest shareholder of TechnipFMC plc (NYSE:FTI), with a stake worth $231.9 million reported as of the end of December. Trailing Pzena Investment Management was Citadel Investment Group, which amassed a stake valued at $54.9 million. Arrowstreet Capital, D E Shaw, and Antipodes Partners 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 SIR Capital Management allocated the biggest weight to TechnipFMC plc (NYSE:FTI), around 3.04% of its 13F portfolio. Antipodes Partners is also relatively very bullish on the stock, designating 1.36 percent of its 13F equity portfolio to FTI.

As one would reasonably expect, key money managers were leading the bulls’ herd. Alyeska Investment Group, managed by Anand Parekh, assembled the most outsized position in TechnipFMC plc (NYSE:FTI). Alyeska Investment Group had $5 million invested in the company at the end of the quarter. Michel Massoud’s Melqart Asset Management also initiated a $3.1 million position during the quarter. The other funds with brand new FTI positions are Donald Sussman’s Paloma Partners, Minhua Zhang’s Weld Capital Management, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).

Let’s now take a look at hedge fund activity in other stocks similar to TechnipFMC plc (NYSE:FTI). These stocks are Neogen Corporation (NASDAQ:NEOG), Foot Locker, Inc. (NYSE:FL), Upwork Inc. (NASDAQ:UPWK), Tenet Healthcare Corp (NYSE:THC), United Bankshares, Inc. (NASDAQ:UBSI), Clean Harbors Inc (NYSE:CLH), and SYNNEX Corporation (NYSE:SNX). This group of stocks’ market caps are similar to FTI’s market cap.

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As you can see these stocks had an average of 23.6 hedge funds with bullish positions and the average amount invested in these stocks was $489 million. That figure was $545 million in FTI’s case. Upwork Inc. (NASDAQ:UPWK) is the most popular stock in this table. On the other hand United Bankshares, Inc. (NASDAQ:UBSI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks TechnipFMC plc (NYSE:FTI) is more popular among hedge funds. Our overall hedge fund sentiment score for FTI is 84. 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 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 returned 7.9% in 2021 through April 1st but still managed to beat the market by 0.4 percentage points. Hedge funds were also right about betting on FTI as the stock returned 14.1% since the end of December (through 4/1) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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