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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Fortis Inc. (NYSE:FTS).
Is FTS a good stock to buy now? Hedge fund interest in Fortis Inc. (NYSE:FTS) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that FTS 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). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Canadian Natural Resources Limited (NYSE:CNQ), Take-Two Interactive Software, Inc. (NASDAQ:TTWO), and Coupa Software Incorporated (NASDAQ:COUP) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are dozens of indicators stock market investors use to evaluate their stock investments. Some of the less known indicators are hedge fund and insider trading moves. We have shown that, historically, those who follow the top picks of the elite fund managers can beat their index-focused peers by a healthy amount (see the details here).
Rajiv Jain of GQG Partners
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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 view the recent hedge fund action regarding Fortis Inc. (NYSE:FTS).
What have hedge funds been doing with Fortis Inc. (NYSE:FTS)?
At Q3's end, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2020. On the other hand, there were a total of 15 hedge funds with a bullish position in FTS a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Renaissance Technologies, holds the biggest position in Fortis Inc. (NYSE:FTS). Renaissance Technologies has a $196.3 million position in the stock, comprising 0.2% of its 13F portfolio. On Renaissance Technologies's heels is Rajiv Jain of GQG Partners, with a $128.1 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining peers with similar optimism comprise Ken Griffin's Citadel Investment Group, Paul Marshall and Ian Wace's Marshall Wace LLP and Steve Cohen's Point72 Asset Management. In terms of the portfolio weights assigned to each position Heronetta Management allocated the biggest weight to Fortis Inc. (NYSE:FTS), around 4.49% of its 13F portfolio. GQG Partners is also relatively very bullish on the stock, earmarking 0.44 percent of its 13F equity portfolio to FTS.
Since Fortis Inc. (NYSE:FTS) has witnessed declining sentiment from the entirety of the hedge funds we track, it's safe to say that there was a specific group of hedgies who sold off their entire stakes last quarter. Intriguingly, Stuart J. Zimmer's Zimmer Partners cut the biggest investment of all the hedgies monitored by Insider Monkey, valued at about $37.5 million in stock, and John Overdeck and David Siegel's Two Sigma Advisors was right behind this move, as the fund dropped about $0.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks similar to Fortis Inc. (NYSE:FTS). We will take a look at Canadian Natural Resources Limited (NYSE:CNQ), Take-Two Interactive Software, Inc. (NASDAQ:TTWO), Coupa Software Incorporated (NASDAQ:COUP), First Republic Bank (NYSE:FRC), Zscaler, Inc. (NASDAQ:ZS), Suncor Energy Inc. (NYSE:SU), and PG&E Corporation (NYSE:PCG). This group of stocks' market caps are closest to FTS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CNQ,30,233173,2 TTWO,52,1289470,-9 COUP,50,3191469,0 FRC,31,1221714,-6 ZS,26,489528,-9 SU,22,559413,-7 PCG,76,6685918,-16 Average,41,1952955,-6.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 41 hedge funds with bullish positions and the average amount invested in these stocks was $1953 million. That figure was $412 million in FTS's case. PG&E Corporation (NYSE:PCG) is the most popular stock in this table. On the other hand Suncor Energy Inc. (NYSE:SU) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Fortis Inc. (NYSE:FTS) is even less popular than SU. Our overall hedge fund sentiment score for FTS is 21. 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 FTS. 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 31.6% in 2020 through December 2nd but managed to beat the market again by 16 percentage points. Unfortunately FTS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); FTS investors were disappointed as the stock returned -1.5% since the end of the third quarter (through 12/2) 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.