There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don't cover. Because of Carl Icahn and other elite funds' exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Fidelity National Financial Inc (NYSE:FNF).
Is Fidelity National Financial Inc (NYSE:FNF) a buy here? Hedge funds are getting more optimistic. The number of bullish hedge fund bets moved up by 2 lately. Our calculations also showed that FNF isn't among the 30 most popular stocks among hedge funds. FNF was in 30 hedge funds' portfolios at the end of March. There were 28 hedge funds in our database with FNF positions at the end of the previous quarter.
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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a gander at the new hedge fund action surrounding Fidelity National Financial Inc (NYSE:FNF).
How have hedgies been trading Fidelity National Financial Inc (NYSE:FNF)?
At the end of the first quarter, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the previous quarter. By comparison, 29 hedge funds held shares or bullish call options in FNF a year ago. With hedgies' sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in Fidelity National Financial Inc (NYSE:FNF) was held by AQR Capital Management, which reported holding $101.1 million worth of stock at the end of March. It was followed by Nitorum Capital with a $53.6 million position. Other investors bullish on the company included D E Shaw, Alyeska Investment Group, and Millennium Management.
As aggregate interest increased, key money managers were leading the bulls' herd. Nitorum Capital, managed by Seth Rosen, initiated the largest position in Fidelity National Financial Inc (NYSE:FNF). Nitorum Capital had $53.6 million invested in the company at the end of the quarter. Anand Parekh's Alyeska Investment Group also initiated a $29 million position during the quarter. The other funds with new positions in the stock are Usman Waheed's Strycker View Capital, Steve Cohen's Point72 Asset Management, and Dmitry Balyasny's Balyasny Asset Management.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Fidelity National Financial Inc (NYSE:FNF) but similarly valued. These stocks are NVR, Inc. (NYSE:NVR), China Eastern Airlines Corp. Ltd. (NYSE:CEA), Goldcorp Inc. (NYSE:GG), and Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY). This group of stocks' market caps match FNF's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position NVR,25,883152,-6 CEA,1,1543,-1 GG,35,871456,11 ALNY,26,753613,-2 Average,21.75,627441,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $627 million. That figure was $428 million in FNF's case. Goldcorp Inc. (NYSE:GG) is the most popular stock in this table. On the other hand China Eastern Airlines Corp. Ltd. (NYSE:CEA) is the least popular one with only 1 bullish hedge fund positions. Fidelity National Financial Inc (NYSE:FNF) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on FNF as the stock returned 4.9% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.