Was The Smart Money Right About FedEx Corporation (FDX)?

In this article you are going to find out whether hedge funds think FedEx Corporation (NYSE:FDX) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

FedEx Corporation (NYSE:FDX) investors should pay attention to a decrease in hedge fund sentiment in recent months. FedEx Corporation (NYSE:FDX) was in 63 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 71. There were 71 hedge funds in our database with FDX positions at the end of the third quarter. Our calculations also showed that FDX isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In today’s marketplace there are a large number of formulas stock traders use to grade stocks. Some of the best formulas are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can outperform the market by a healthy margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

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

At Q4’s end, a total of 63 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FDX over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in FedEx Corporation (NYSE:FDX) was held by Bill & Melinda Gates Foundation Trust, which reported holding $785.4 million worth of stock at the end of December. It was followed by Southeastern Asset Management with a $229.9 million position. Other investors bullish on the company included Platinum Asset Management, AQR Capital Management, and Candlestick Capital Management. In terms of the portfolio weights assigned to each position 12th Street Asset Management allocated the biggest weight to FedEx Corporation (NYSE:FDX), around 6.98% of its 13F portfolio. Southeastern Asset Management is also relatively very bullish on the stock, designating 5.13 percent of its 13F equity portfolio to FDX.

Judging by the fact that FedEx Corporation (NYSE:FDX) has faced a decline in interest from the smart money, it’s easy to see that there is a sect of funds that slashed their entire stakes in the fourth quarter. At the top of the heap, Alexander Mitchell’s Scopus Asset Management cut the biggest investment of the 750 funds tracked by Insider Monkey, worth about $92.7 million in stock, and Louis Bacon’s Moore Global Investments was right behind this move, as the fund cut about $73.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 8 funds in the fourth quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as FedEx Corporation (NYSE:FDX) but similarly valued. We will take a look at Crown Castle International Corp. (NYSE:CCI), Lam Research Corporation (NASDAQ:LRCX), Duke Energy Corporation (NYSE:DUK), Autodesk, Inc. (NASDAQ:ADSK), The Sherwin-Williams Company (NYSE:SHW), The Bank of Nova Scotia (NYSE:BNS), and CME Group Inc (NASDAQ:CME). This group of stocks’ market valuations match FDX’s market valuation.

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As you can see these stocks had an average of 46.6 hedge funds with bullish positions and the average amount invested in these stocks was $1904 million. That figure was $2012 million in FDX’s case. Autodesk, Inc. (NASDAQ:ADSK) is the most popular stock in this table. On the other hand The Bank of Nova Scotia (NYSE:BNS) is the least popular one with only 19 bullish hedge fund positions. FedEx Corporation (NYSE:FDX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FDX is 70.4. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on FDX, though not to the same extent, as the stock returned 12.1% since Q4 (through April 30th) and outperformed the market as well.

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

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