In this article we will check out the progression of hedge fund sentiment towards Fastenal Company (NASDAQ:FAST) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Fastenal Company (NASDAQ:FAST) investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. Fastenal Company (NASDAQ:FAST) was in 25 hedge funds’ portfolios at the end of June. The all time high for this statistic is 38. There were 24 hedge funds in our database with FAST holdings at the end of March. Our calculations also showed that FAST isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 79 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.
William Von Mueffling of Cantillon Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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. With all of this in mind we’re going to take a look at the latest hedge fund action encompassing Fastenal Company (NASDAQ:FAST).
Do Hedge Funds Think FAST Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FAST over the last 24 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
More specifically, Cantillon Capital Management was the largest shareholder of Fastenal Company (NASDAQ:FAST), with a stake worth $302.6 million reported as of the end of June. Trailing Cantillon Capital Management was Citadel Investment Group, which amassed a stake valued at $111.1 million. Select Equity Group, D E Shaw, and Motley Fool Asset Management 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 Unio Capital allocated the biggest weight to Fastenal Company (NASDAQ:FAST), around 4.05% of its 13F portfolio. Cantillon Capital Management is also relatively very bullish on the stock, dishing out 2.04 percent of its 13F equity portfolio to FAST.
Now, key hedge funds were breaking ground themselves. Millennium Management, managed by Israel Englander, assembled the most valuable position in Fastenal Company (NASDAQ:FAST). Millennium Management had $4.7 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $1.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Gelband’s ExodusPoint Capital, Bruce Kovner’s Caxton Associates LP, and Renee Yao’s Neo Ivy Capital.
Let’s check out hedge fund activity in other stocks similar to Fastenal Company (NASDAQ:FAST). These stocks are Willis Towers Watson Public Limited Company (NASDAQ:WLTW), Zscaler, Inc. (NASDAQ:ZS), McKesson Corporation (NYSE:MCK), Old Dominion Freight Line, Inc. (NASDAQ:ODFL), ViacomCBS Inc. (NASDAQ:VIAC), Occidental Petroleum Corporation (NYSE:OXY), and Equifax Inc. (NYSE:EFX). This group of stocks’ market caps resemble FAST’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WLTW | 70 | 5594291 | 4 |
| ZS | 38 | 1102517 | 4 |
| MCK | 51 | 2314668 | 0 |
| ODFL | 47 | 673076 | 7 |
| VIAC | 71 | 1872050 | -18 |
| OXY | 57 | 3620384 | 5 |
| EFX | 37 | 3075021 | 0 |
| Average | 53 | 2607430 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 53 hedge funds with bullish positions and the average amount invested in these stocks was $2607 million. That figure was $650 million in FAST’s case. ViacomCBS Inc. (NASDAQ:VIAC) is the most popular stock in this table. On the other hand Equifax Inc. (NYSE:EFX) is the least popular one with only 37 bullish hedge fund positions. Compared to these stocks Fastenal Company (NASDAQ:FAST) is even less popular than EFX. Our overall hedge fund sentiment score for FAST is 25.7. 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. Hedge funds clearly dropped the ball on FAST as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on FAST as the stock returned 8.3% since Q2 (through October 22nd) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
