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Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Fortune Brands Home & Security Inc (NYSE:FBHS) in this article.
Is FBHS stock a buy? Fortune Brands Home & Security Inc (NYSE:FBHS) has seen a decrease in hedge fund sentiment recently. Fortune Brands Home & Security Inc (NYSE:FBHS) was in 30 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 37. There were 33 hedge funds in our database with FBHS holdings at the end of September. Our calculations also showed that FBHS isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Cliff Asness of AQR Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. With all of this in mind let's view the key hedge fund action regarding Fortune Brands Home & Security Inc (NYSE:FBHS).
Do Hedge Funds Think FBHS Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FBHS 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.
Among these funds, AQR Capital Management held the most valuable stake in Fortune Brands Home & Security Inc (NYSE:FBHS), which was worth $60.4 million at the end of the fourth quarter. On the second spot was Holocene Advisors which amassed $53.8 million worth of shares. Giverny Capital, GAMCO Investors, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Giverny Capital allocated the biggest weight to Fortune Brands Home & Security Inc (NYSE:FBHS), around 3.39% of its 13F portfolio. Carlson Capital is also relatively very bullish on the stock, earmarking 0.47 percent of its 13F equity portfolio to FBHS.
Because Fortune Brands Home & Security Inc (NYSE:FBHS) has experienced falling interest from the smart money, it's safe to say that there is a sect of fund managers that elected to cut their positions entirely heading into Q1. At the top of the heap, Steve Cohen's Point72 Asset Management sold off the biggest position of the 750 funds followed by Insider Monkey, valued at about $16.9 million in stock. Benjamin A. Smith's fund, Laurion Capital Management, also said goodbye to its stock, about $10.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds heading into Q1.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Fortune Brands Home & Security Inc (NYSE:FBHS) but similarly valued. We will take a look at InterContinental Hotels Group PLC (NYSE:IHG), Autohome Inc (NYSE:ATHM), Brookfield Renewable Partners L.P. (NYSE:BEP), W.R. Berkley Corporation (NYSE:WRB), Dr. Reddy's Laboratories Limited (NYSE:RDY), Annaly Capital Management, Inc. (NYSE:NLY), and RPM International Inc. (NYSE:RPM). This group of stocks' market valuations are closest to FBHS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IHG,7,20273,0 ATHM,16,714430,-1 BEP,20,277635,3 WRB,37,680717,9 RDY,12,219212,-1 NLY,21,317077,-6 RPM,25,102192,-1 Average,19.7,333077,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.7 hedge funds with bullish positions and the average amount invested in these stocks was $333 million. That figure was $343 million in FBHS's case. W.R. Berkley Corporation (NYSE:WRB) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 7 bullish hedge fund positions. Fortune Brands Home & Security Inc (NYSE:FBHS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FBHS is 64.7. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on FBHS as the stock returned 18.2% since the end of Q4 (through 4/12) 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.