Should I Buy FTI Consulting, Inc. (FCN)?

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 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 30th, 2021. In this article we are going to take a look at smart money sentiment towards FTI Consulting, Inc. (NYSE:FCN).

FTI Consulting, Inc. (NYSE:FCN) was in 30 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 37. FCN has experienced an increase in hedge fund sentiment in recent months. There were 24 hedge funds in our database with FCN holdings at the end of March. Our calculations also showed that FCN isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Minhua Zhang of Weld 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. Keeping this in mind let’s analyze the new hedge fund action surrounding FTI Consulting, Inc. (NYSE:FCN).

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

At second quarter’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FCN over the last 24 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in FTI Consulting, Inc. (NYSE:FCN) was held by Greenvale Capital, which reported holding $92.2 million worth of stock at the end of June. It was followed by Nitorum Capital with a $84 million position. Other investors bullish on the company included Two Sigma Advisors, Renaissance Technologies, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Greenvale Capital allocated the biggest weight to FTI Consulting, Inc. (NYSE:FCN), around 10.17% of its 13F portfolio. Bayberry Capital Partners is also relatively very bullish on the stock, earmarking 5.92 percent of its 13F equity portfolio to FCN.

Now, key hedge funds were leading the bulls’ herd. Schonfeld Strategic Advisors, managed by Ryan Tolkin (CIO), initiated the largest position in FTI Consulting, Inc. (NYSE:FCN). Schonfeld Strategic Advisors had $1.4 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $1 million investment in the stock during the quarter. The other funds with brand new FCN positions are Qing Li’s Sciencast Management, Minhua Zhang’s Weld Capital Management, and Bruce Kovner’s Caxton Associates LP.

Let’s now take a look at hedge fund activity in other stocks similar to FTI Consulting, Inc. (NYSE:FCN). We will take a look at Exponent, Inc. (NASDAQ:EXPO), Cloudera, Inc. (NYSE:CLDR), Inari Medical, Inc. (NASDAQ:NARI), Bloom Energy Corporation (NYSE:BE), Hawaiian Electric Industries, Inc. (NYSE:HE), MGIC Investment Corporation (NYSE:MTG), and Trupanion Inc (NASDAQ:TRUP). This group of stocks’ market caps are similar to FCN’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $370 million. That figure was $384 million in FCN’s case. Cloudera, Inc. (NYSE:CLDR) is the most popular stock in this table. On the other hand Hawaiian Electric Industries, Inc. (NYSE:HE) is the least popular one with only 14 bullish hedge fund positions. FTI Consulting, Inc. (NYSE:FCN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FCN is 74.3. 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 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on FCN as the stock returned 5.2% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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