In this article we will take a look at whether hedge funds think Fluor Corporation (NYSE:FLR) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is FLR a good stock to buy now? Fluor Corporation (NYSE:FLR) was in 17 hedge funds' portfolios at the end of September. The all time high for this statistic is 29. FLR has experienced a decrease in hedge fund sentiment of late. There were 20 hedge funds in our database with FLR positions at the end of the second quarter. Our calculations also showed that FLR 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Sander Gerber of Hudson Bay Capital
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 15 best blue chip stocks 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 we're going to check out the key hedge fund action encompassing Fluor Corporation (NYSE:FLR).
Do Hedge Funds Think FLR Is A Good Stock To Buy Now?
At third quarter's end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from the second quarter of 2020. By comparison, 20 hedge funds held shares or bullish call options in FLR a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
The largest stake in Fluor Corporation (NYSE:FLR) was held by D E Shaw, which reported holding $24.6 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $23.1 million position. Other investors bullish on the company included Empyrean Capital Partners, Renaissance Technologies, and Citadel Investment Group. In terms of the portfolio weights assigned to each position AWH Capital allocated the biggest weight to Fluor Corporation (NYSE:FLR), around 2.94% of its 13F portfolio. Empyrean Capital Partners is also relatively very bullish on the stock, earmarking 0.56 percent of its 13F equity portfolio to FLR.
Because Fluor Corporation (NYSE:FLR) has experienced bearish sentiment from hedge fund managers, it's safe to say that there exists a select few money managers that slashed their positions entirely by the end of the third quarter. At the top of the heap, Jos Shaver's Electron Capital Partners sold off the largest investment of all the hedgies tracked by Insider Monkey, comprising close to $12 million in stock, and Greg Poole's Echo Street Capital Management was right behind this move, as the fund said goodbye to about $0.8 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 3 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks similar to Fluor Corporation (NYSE:FLR). These stocks are Compass Diversified (NYSE:CODI), PDC Energy Inc (NASDAQ:PDCE), First Midwest Bancorp Inc (NASDAQ:FMBI), HeadHunter Group PLC (NASDAQ:HHR), Delek Logistics Partners LP (NYSE:DKL), 360 DigiTech, Inc. (NASDAQ:QFIN), and Retail Opportunity Investments Corp (NASDAQ:ROIC). This group of stocks' market valuations resemble FLR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CODI,3,15974,-1 PDCE,24,211888,1 FMBI,17,43845,6 HHR,8,18061,3 DKL,1,2964,0 QFIN,15,49651,3 ROIC,19,53660,-1 Average,12.4,56578,1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $84 million in FLR's case. PDC Energy Inc (NASDAQ:PDCE) is the most popular stock in this table. On the other hand Delek Logistics Partners LP (NYSE:DKL) is the least popular one with only 1 bullish hedge fund positions. Fluor Corporation (NYSE:FLR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FLR is 54.4. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on FLR as the stock returned 86.6% since the end of Q3 (through 12/14) 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.