We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards FleetCor Technologies, Inc. (NYSE:FLT) and determine whether hedge funds skillfully traded this stock.
FleetCor Technologies, Inc. (NYSE:FLT) was in 53 hedge funds' portfolios at the end of June. The all time high for this statistics is 60. FLT shareholders have witnessed an increase in hedge fund interest recently. There were 51 hedge funds in our database with FLT holdings at the end of March. Our calculations also showed that FLT isn't among the 30 most popular stocks among hedge funds (click for Q2 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.
In the eyes of most stock holders, hedge funds are perceived as unimportant, old financial tools of yesteryear. While there are over 8000 funds trading at the moment, We hone in on the leaders of this group, approximately 850 funds. These money managers direct most of the hedge fund industry's total asset base, and by monitoring their highest performing equity investments, Insider Monkey has figured out a few investment strategies that have historically outperformed the S&P 500 index. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Stanley Druckenmiller of Duquesne Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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 precious metals prices. So, we are checking out this junior gold mining stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. Now we're going to view the latest hedge fund action regarding FleetCor Technologies, Inc. (NYSE:FLT).
What does smart money think about FleetCor Technologies, Inc. (NYSE:FLT)?
At the end of the second quarter, a total of 53 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FLT over the last 20 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 FleetCor Technologies, Inc. (NYSE:FLT) was held by Melvin Capital Management, which reported holding $344.9 million worth of stock at the end of September. It was followed by Tiger Global Management LLC with a $325.8 million position. Other investors bullish on the company included Steadfast Capital Management, Palestra Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Banbury Partners allocated the biggest weight to FleetCor Technologies, Inc. (NYSE:FLT), around 8.81% of its 13F portfolio. Atalan Capital is also relatively very bullish on the stock, designating 8.61 percent of its 13F equity portfolio to FLT.
Now, specific money managers were leading the bulls' herd. D1 Capital Partners, managed by Daniel Sundheim, established the largest position in FleetCor Technologies, Inc. (NYSE:FLT). D1 Capital Partners had $77.6 million invested in the company at the end of the quarter. Jeff Lignelli's Incline Global Management also made a $31.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Stanley Druckenmiller's Duquesne Capital, Leon Shaulov's Maplelane Capital, and Anand Parekh's Alyeska Investment Group.
Let's go over hedge fund activity in other stocks similar to FleetCor Technologies, Inc. (NYSE:FLT). We will take a look at Aptiv PLC (NYSE:APTV), FirstEnergy Corp. (NYSE:FE), Simon Property Group, Inc (NYSE:SPG), Canon Inc. (NYSE:CAJ), Equifax Inc. (NYSE:EFX), Cerner Corporation (NASDAQ:CERN), and Fiat Chrysler Automobiles NV (NYSE:FCAU). All of these stocks' market caps are similar to FLT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position APTV,43,1158307,10 FE,41,992017,-3 SPG,27,531930,-2 CAJ,9,55132,2 EFX,28,1186553,-4 CERN,38,875303,-3 FCAU,20,365898,-5 Average,29.4,737877,-0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.4 hedge funds with bullish positions and the average amount invested in these stocks was $738 million. That figure was $2212 million in FLT's case. Aptiv PLC (NYSE:APTV) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks FleetCor Technologies, Inc. (NYSE:FLT) is more popular among hedge funds. Our overall hedge fund sentiment score for FLT is 83.5. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 33% in 2020 through the end of August and still beat the market by 23.2 percentage points. Unfortunately FLT wasn't nearly as popular as these 10 stocks and hedge funds that were betting on FLT were disappointed as the stock returned 0% since the end of the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.