The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. What do these smart investors think about Fortune Brands Home & Security Inc (NYSE:FBHS)?
Fortune Brands Home & Security Inc (NYSE:FBHS) has experienced a decrease in activity from the world’s largest hedge funds lately. Our calculations also showed that FBHS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Lee Ainslie of Maverick Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s take a glance at the latest hedge fund action surrounding Fortune Brands Home & Security Inc (NYSE:FBHS).
Hedge fund activity in Fortune Brands Home & Security Inc (NYSE:FBHS)
Heading into the second quarter of 2020, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from the previous quarter. On the other hand, there were a total of 29 hedge funds with a bullish position in FBHS a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Southport Management was the largest shareholder of Fortune Brands Home & Security Inc (NYSE:FBHS), with a stake worth $432.5 million reported as of the end of September. Trailing Southport Management was Holocene Advisors, which amassed a stake valued at $49.8 million. GAMCO Investors, AQR Capital Management, and Giverny Capital 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 Southport Management allocated the biggest weight to Fortune Brands Home & Security Inc (NYSE:FBHS), around 4.82% of its 13F portfolio. Giverny Capital is also relatively very bullish on the stock, designating 2.78 percent of its 13F equity portfolio to FBHS.
Since Fortune Brands Home & Security Inc (NYSE:FBHS) has experienced falling interest from the aggregate hedge fund industry, logic holds that there was a specific group of fund managers that decided to sell off their positions entirely by the end of the first quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group sold off the biggest stake of the 750 funds tracked by Insider Monkey, worth an estimated $95.2 million in stock. Jack Woodruff’s fund, Candlestick Capital Management, also said goodbye to its stock, about $37.5 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 3 funds by the end of the first quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Fortune Brands Home & Security Inc (NYSE:FBHS) but similarly valued. These stocks are Halliburton Company (NYSE:HAL), Entegris Inc (NASDAQ:ENTG), Omega Healthcare Investors Inc (NYSE:OHI), and 10x Genomics, Inc. (NASDAQ:TXG). All of these stocks’ market caps match FBHS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HAL | 32 | 513523 | 1 |
| ENTG | 19 | 488063 | -5 |
| OHI | 17 | 152576 | -1 |
| TXG | 20 | 166530 | 8 |
| Average | 22 | 330173 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $330 million. That figure was $640 million in FBHS’s case. Halliburton Company (NYSE:HAL) is the most popular stock in this table. On the other hand Omega Healthcare Investors Inc (NYSE:OHI) is the least popular one with only 17 bullish hedge fund positions. Fortune Brands Home & Security Inc (NYSE:FBHS) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on FBHS as the stock returned 41.5% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Fortune Brands Innovations Inc. (NYSE:FBIN)
Follow Fortune Brands Innovations Inc. (NYSE:FBIN)
Disclosure: None. This article was originally published at Insider Monkey.
