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In this article you are going to find out whether hedge funds think FirstService Corporation (TSE:FSV) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is FSV a good stock to buy now? FirstService Corporation (TSE:FSV) has experienced an increase in hedge fund sentiment recently. FirstService Corporation (TSE:FSV) was in 12 hedge funds' portfolios at the end of September. The all time high for this statistics is 13. Our calculations also showed that FSV 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.
According to most traders, hedge funds are seen as worthless, outdated investment tools of the past. While there are more than 8000 funds in operation today, Our experts hone in on the leaders of this club, approximately 850 funds. These money managers preside over the majority of the smart money's total capital, and by paying attention to their highest performing picks, Insider Monkey has revealed many investment strategies that have historically outrun the market. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Ian Wace of Marshall Wace
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. Keeping this in mind we're going to take a peek at the latest hedge fund action surrounding FirstService Corporation (TSE:FSV).
Do Hedge Funds Think FSV Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FSV over the last 21 quarters. With the smart money's capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the largest position in FirstService Corporation (TSE:FSV), worth close to $129.3 million, amounting to 0.1% of its total 13F portfolio. The second largest stake is held by Royce & Associates, led by Chuck Royce, holding a $28.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism encompass Leon Lowenstein's Lionstone Capital Management, John Osterweis's Osterweis Capital Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Lionstone Capital Management allocated the biggest weight to FirstService Corporation (TSE:FSV), around 9.5% of its 13F portfolio. AltraVue Capital is also relatively very bullish on the stock, setting aside 2.32 percent of its 13F equity portfolio to FSV.
With a general bullishness amongst the heavyweights, key hedge funds were breaking ground themselves. LMR Partners, managed by Ben Levine, Andrew Manuel and Stefan Renold, assembled the largest position in FirstService Corporation (TSE:FSV). LMR Partners had $3.4 million invested in the company at the end of the quarter. Brad Dunkley and Blair Levinsky's Waratah Capital Advisors also made a $3.3 million investment in the stock during the quarter. The only other fund with a new position in the stock is Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's go over hedge fund activity in other stocks similar to FirstService Corporation (TSE:FSV). These stocks are BJ's Wholesale Club Holdings, Inc. (NYSE:BJ), InVitae Corporation (NYSE:NVTA), Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI), Huntington Ingalls Industries Inc (NYSE:HII), Vertiv Holdings Co (NYSE:VRT), Healthcare Trust Of America Inc (NYSE:HTA), and First American Financial Corp (NYSE:FAF). This group of stocks' market caps are similar to FSV's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BJ,31,259627,0 NVTA,24,1221576,8 OLLI,34,227297,10 HII,29,321301,-1 VRT,51,970203,11 HTA,19,100300,3 FAF,42,712335,-2 Average,32.9,544663,4.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.9 hedge funds with bullish positions and the average amount invested in these stocks was $545 million. That figure was $218 million in FSV's case. Vertiv Holdings Co (NYSE:VRT) is the most popular stock in this table. On the other hand Healthcare Trust Of America Inc (NYSE:HTA) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks FirstService Corporation (TSE:FSV) is even less popular than HTA. Our overall hedge fund sentiment score for FSV is 33.7. 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. Hedge funds dodged a bullet by taking a bearish stance towards FSV. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th but managed to beat the market again by 16.2 percentage points. Unfortunately FSV wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); FSV investors were disappointed as the stock returned 0.2% since the end of the third quarter (through 12/8) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.