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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Fuel Tech Inc. (NASDAQ:FTEK).
Fuel Tech Inc. (NASDAQ:FTEK) has seen an increase in hedge fund interest in recent months. Fuel Tech Inc. (NASDAQ:FTEK) was in 3 hedge funds' portfolios at the end of September. The all time high for this statistics is 5. Our calculations also showed that FTEK isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Siegel of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website. Now let's take a gander at the recent hedge fund action surrounding Fuel Tech Inc. (NASDAQ:FTEK).
What have hedge funds been doing with Fuel Tech Inc. (NASDAQ:FTEK)?
Heading into the fourth quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FTEK over the last 21 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Fuel Tech Inc. (NASDAQ:FTEK) was held by Renaissance Technologies, which reported holding $1.1 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $0 million position. The only other hedge fund that is bullish on the company was Elkhorn Partners.
As aggregate interest increased, key money managers were leading the bulls' herd. Two Sigma Advisors, managed by John Overdeck and David Siegel, created the largest position in Fuel Tech Inc. (NASDAQ:FTEK). Two Sigma Advisors had $0 million invested in the company at the end of the quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Fuel Tech Inc. (NASDAQ:FTEK) but similarly valued. These stocks are The L.S. Starrett Company (NYSE:SCX), Harvest Capital Credit Corporation (NASDAQ:HCAP), Rubicon Technology, Inc. (NASDAQ:RBCN), AzurRx BioPharma, Inc. (NASDAQ:AZRX), Westell Technologies Inc. (NASDAQ:WSTL), CVD Equipment Corporation (NASDAQ:CVV), and Castor Maritime Inc. (NASDAQ:CTRM). All of these stocks' market caps match FTEK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SCX,4,3130,0 HCAP,1,254,1 RBCN,3,3657,-1 AZRX,1,21,-1 WSTL,1,1229,-1 CVV,2,428,0 CTRM,2,270,-2 Average,2,1284,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 2 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $1 million in FTEK's case. The L.S. Starrett Company (NYSE:SCX) is the most popular stock in this table. On the other hand Harvest Capital Credit Corporation (NASDAQ:HCAP) is the least popular one with only 1 bullish hedge fund positions. Fuel Tech Inc. (NASDAQ:FTEK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FTEK is 57.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. Hedge funds were also right about betting on FTEK as the stock returned 235.7% since the end of Q3 (through 11/23) 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.