Formula One Group (FWONK): Hedge Funds Cashing Out As The Stock Price Climbs
Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 of 2018 due to various reasons. Nevertheless, the data show elite investors' consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETFs by nearly 10 percentage points during the first 11 months of 2019. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Formula One Group (NASDAQ:FWONK) from the perspective of those elite funds.
Formula One Group (NASDAQ:FWONK) was in 30 hedge funds' portfolios at the end of the third quarter of 2019. FWONK has experienced a decrease in enthusiasm from smart money of late. There were 32 hedge funds in our database with FWONK holdings at the end of the previous quarter. Our calculations also showed that FWONK isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most investors, hedge funds are viewed as slow, outdated investment vehicles of years past. While there are more than 8000 funds with their doors open today, We hone in on the leaders of this club, around 750 funds. Most estimates calculate that this group of people control the lion's share of the smart money's total asset base, and by tracking their highest performing stock picks, Insider Monkey has brought to light a few investment strategies that have historically defeated 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 annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_758429" align="aligncenter" width="450"]
Ric Dillon of Diamond Hill Capital[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's check out the latest hedge fund action surrounding Formula One Group (NASDAQ:FWONK).
What have hedge funds been doing with Formula One Group (NASDAQ:FWONK)?
Heading into the fourth quarter of 2019, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the second quarter of 2019. By comparison, 39 hedge funds held shares or bullish call options in FWONK a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Viking Global held the most valuable stake in Formula One Group (NASDAQ:FWONK), which was worth $415.8 million at the end of the third quarter. On the second spot was Eminence Capital which amassed $371.5 million worth of shares. Ashe Capital, Sculptor Capital, and Diamond Hill Capital 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 Ashe Capital allocated the biggest weight to Formula One Group (NASDAQ:FWONK), around 16.48% of its portfolio. Kontiki Capital is also relatively very bullish on the stock, designating 14.96 percent of its 13F equity portfolio to FWONK.
Seeing as Formula One Group (NASDAQ:FWONK) has experienced falling interest from the smart money, we can see that there were a few funds that slashed their entire stakes by the end of the third quarter. Interestingly, Crispin Odey's Odey Asset Management Group sold off the largest investment of the "upper crust" of funds followed by Insider Monkey, worth an estimated $18.4 million in stock, and Spencer M. Waxman's Shannon River Fund Management was right behind this move, as the fund dropped about $5.5 million worth. These transactions are important to note, as total hedge fund interest dropped by 2 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Formula One Group (NASDAQ:FWONK) but similarly valued. We will take a look at Avery Dennison Corporation (NYSE:AVY), Vereit Inc (NYSE:VER), ASE Technology Holding Co., Ltd. (NYSE:ASX), and Galapagos NV (NASDAQ:GLPG). This group of stocks' market values resemble FWONK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AVY,22,125790,1 VER,34,613230,11 ASX,8,192875,0 GLPG,13,142930,-1 Average,19.25,268706,2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $269 million. That figure was $1916 million in FWONK's case. Vereit Inc (NYSE:VER) is the most popular stock in this table. On the other hand ASE Technology Holding Co., Ltd. (NYSE:ASX) is the least popular one with only 8 bullish hedge fund positions. Formula One Group (NASDAQ:FWONK) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on FWONK, though not to the same extent, as the stock returned 8.4% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
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