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 more than 730 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of June 28th, 2019. What do these smart investors think about HB Fuller Co (NYSE:FUL)?
Is HB Fuller Co (NYSE:FUL) an exceptional investment right now? The best stock pickers are getting less optimistic. The number of bullish hedge fund bets went down by 6 lately. Our calculations also showed that FUL isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a look at the key hedge fund action regarding HB Fuller Co (NYSE:FUL).
What have hedge funds been doing with HB Fuller Co (NYSE:FUL)?
Heading into the third quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -33% from one quarter earlier. By comparison, 13 hedge funds held shares or bullish call options in FUL a year ago. With hedgies' sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, P2 Capital Partners was the largest shareholder of HB Fuller Co (NYSE:FUL), with a stake worth $62.9 million reported as of the end of March. Trailing P2 Capital Partners was GAMCO Investors, which amassed a stake valued at $26.4 million. Renaissance Technologies, Citadel Investment Group, and GLG Partners were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as HB Fuller Co (NYSE:FUL) has experienced a decline in interest from the entirety of the hedge funds we track, it's easy to see that there were a few hedgies who sold off their entire stakes in the second quarter. Interestingly, Ed Bosek's BeaconLight Capital dumped the largest position of the "upper crust" of funds watched by Insider Monkey, comprising an estimated $11 million in stock, and Jonathan Barrett and Paul Segal's Luminus Management was right behind this move, as the fund dropped about $5.7 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 6 funds in the second quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as HB Fuller Co (NYSE:FUL) but similarly valued. These stocks are EVO Payments, Inc. (NASDAQ:EVOP), Vishay Intertechnology, Inc. (NYSE:VSH), First Financial Bancorp (NASDAQ:FFBC), and 8x8, Inc. (NYSE:EGHT). This group of stocks' market valuations match FUL's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EVOP,13,73800,0 VSH,19,297689,-2 FFBC,8,29058,0 EGHT,20,476772,0 Average,15,219330,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $219 million. That figure was $126 million in FUL's case. 8x8, Inc. (NYSE:EGHT) is the most popular stock in this table. On the other hand First Financial Bancorp (NASDAQ:FFBC) is the least popular one with only 8 bullish hedge fund positions. HB Fuller Co (NYSE:FUL) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately FUL wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); FUL investors were disappointed as the stock returned 0.7% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.