The market has been volatile in the last few months as the Federal Reserve finalized its rate cuts and uncertainty looms over trade negotiations with China. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points over the last 12 months. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure since summer months, though some funds increased their exposure dramatically at the end of Q3 and the beginning of Q4. In this article, we analyze what the smart money thinks of World Fuel Services Corporation (NYSE:INT) and find out how it is affected by hedge funds’ moves.
Is World Fuel Services Corporation (NYSE:INT) ready to rally soon? The best stock pickers are becoming less hopeful. The number of long hedge fund positions were cut by 1 in recent months. Our calculations also showed that INT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). INT was in 18 hedge funds’ portfolios at the end of the third quarter of 2019. There were 19 hedge funds in our database with INT positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are many signals market participants use to appraise their stock investments. A duo of the best signals are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can outclass the market by a very impressive margin (see the details here).
Cliff Asness of AQR Capital Management
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a look at the fresh hedge fund action encompassing World Fuel Services Corporation (NYSE:INT).
What have hedge funds been doing with World Fuel Services Corporation (NYSE:INT)?
At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. On the other hand, there were a total of 13 hedge funds with a bullish position in INT 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.
According to Insider Monkey’s hedge fund database, Cliff Asness’s AQR Capital Management has the biggest position in World Fuel Services Corporation (NYSE:INT), worth close to $86.5 million, accounting for 0.1% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, with a $33.9 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that hold long positions include Todd J. Kantor’s Encompass Capital Advisors, David Rosen’s Rubric Capital Management and Alexander Mitchell’s Scopus Asset Management. In terms of the portfolio weights assigned to each position Rubric Capital Management allocated the biggest weight to World Fuel Services Corporation (NYSE:INT), around 1.77% of its 13F portfolio. Encompass Capital Advisors is also relatively very bullish on the stock, setting aside 1.49 percent of its 13F equity portfolio to INT.
Judging by the fact that World Fuel Services Corporation (NYSE:INT) has experienced a decline in interest from hedge fund managers, logic holds that there exists a select few money managers that slashed their positions entirely in the third quarter. Interestingly, Ken Griffin’s Citadel Investment Group said goodbye to the biggest stake of all the hedgies followed by Insider Monkey, worth about $2.6 million in stock. Peter Rathjens, Bruce Clarke and John Campbell’s fund, Arrowstreet Capital, also dropped its stock, about $1.6 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 1 funds in the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as World Fuel Services Corporation (NYSE:INT) but similarly valued. These stocks are Element Solutions Inc (NYSE:ESI), Wright Medical Group N.V. (NASDAQ:WMGI), Sunoco LP (NYSE:SUN), and Arco Platform Limited (NASDAQ:ARCE). All of these stocks’ market caps are similar to INT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ESI | 26 | 604940 | -1 |
| WMGI | 35 | 705939 | 1 |
| SUN | 3 | 6682 | -3 |
| ARCE | 12 | 60723 | 3 |
| Average | 19 | 344571 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $345 million. That figure was $200 million in INT’s case. Wright Medical Group N.V. (NASDAQ:WMGI) is the most popular stock in this table. On the other hand Sunoco LP (NYSE:SUN) is the least popular one with only 3 bullish hedge fund positions. World Fuel Services Corporation (NYSE:INT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on INT, though not to the same extent, as the stock returned 6.2% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
