This Is How Top Investors Are Trading Financial Engines Inc (FNGN)

Many investors, including Carl Icahn or Stan Druckenmiller, have been saying for a while now that the current market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the third quarter, many investors lost money due to unpredictable events such as the concerns over Valeant’s drug pricing policy that led to an overall drop among pharma stocks. Nevertheless, many of the stocks that tanked in the third quarter still sport strong fundamentals and their decline was more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Financial Engines Inc (NASDAQ:FNGN) changed recently.

Is Financial Engines Inc (NASDAQ:FNGN) a buy, sell, or hold? Prominent investors are becoming less confident. The number of bullish hedge fund positions retreated by one in recent months. At the end of this article we will also compare FNGN to other stocks including Box Inc (NYSE:BOX), Etsy Inc (NASDAQ:ETSY), and Wayfair Inc (NYSE:W) to get a better sense of its popularity.

To most investors, hedge funds are seen as unimportant, old financial tools of years past. While there are more than 8000 funds trading today, We look at the bigwigs of this club, approximately 700 funds. These hedge fund managers watch over bulk of the smart money’s total asset base, and by paying attention to their first-class stock picks, Insider Monkey has formulated many investment strategies that have historically outpaced the market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points a year for a decade in their back tests.

Now, we’re going to take a look at the new action surrounding Financial Engines Inc (NASDAQ:FNGN).

How have hedgies been trading Financial Engines Inc (NASDAQ:FNGN)?

At Q3’s end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from the previous quarter. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Vivek Mehta and Aaron Husock’s ShearLink Capital has the most valuable position in Financial Engines Inc (NASDAQ:FNGN), worth close to $9.4 million, amounting to 4.1% of its total 13F portfolio. The second most bullish fund manager is Matthew A. Weatherbie of Weatherbie Capital, with a $9.4 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions include Chuck Royce’s Royce & Associates, Tom Henwood’s OMT Capital Management and Israel Englander’s Millennium Management.

Judging by the fact that Financial Engines Inc (NASDAQ:FNGN) has witnessed a declination in interest from hedge fund managers, it’s easy to see that there was a specific group of hedgies that slashed their entire stakes last quarter. Interestingly, D. E. Shaw’s D E Shaw said goodbye to the biggest stake of all the hedgies watched by Insider Monkey, worth close to $0.6 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also said goodbye to its stock, about $0.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to Financial Engines Inc (NASDAQ:FNGN). We will take a look at Box Inc (NYSE:BOX), Etsy Inc (NASDAQ:ETSY), Wayfair Inc (NYSE:W), and United States Steel Corporation (NYSE:X). This group of stocks’ market caps match FNGN’s market cap.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $161 million. That figure was $30 million in FNGN’s case. Wayfair Inc (NYSE:W) is the most popular stock in this table with 28 funds reporting stakes as of September 30. On the other hand Etsy Inc (NASDAQ:ETSY) is the least popular one with only 3 bullish hedge fund positions. Financial Engines Inc (NASDAQ:FNGN) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard Wayfair might be a better candidate to consider a long position.