Is FTS International, Inc. (NYSE:FTSI) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is FTS International, Inc. (NYSE:FTSI) a healthy stock for your portfolio? The best stock pickers are turning less bullish. The number of long hedge fund positions shrunk by 3 recently. Our calculations also showed that FTSI isn't among the 30 most popular stocks among hedge funds (see the video below). FTSI was in 18 hedge funds' portfolios at the end of the second quarter of 2019. There were 21 hedge funds in our database with FTSI positions at the end of the previous quarter. Video: Click the image to 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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's analyze the latest hedge fund action regarding FTS International, Inc. (NYSE:FTSI).
What does smart money think about FTS International, Inc. (NYSE:FTSI)?
At Q2's end, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FTSI over the last 16 quarters. With the smart money's capital changing hands, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, Citadel Investment Group was the largest shareholder of FTS International, Inc. (NYSE:FTSI), with a stake worth $4.5 million reported as of the end of March. Trailing Citadel Investment Group was QVT Financial, which amassed a stake valued at $4.5 million. DW Partners, Adage Capital Management, and Elm Ridge Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as FTS International, Inc. (NYSE:FTSI) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there were a few funds that decided to sell off their full holdings by the end of the second quarter. Intriguingly, Israel Englander's Millennium Management cut the largest investment of the 750 funds monitored by Insider Monkey, worth about $26.9 million in stock, and Didric Cederholm's Lion Point was right behind this move, as the fund dumped about $16.6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 3 funds by the end of the second quarter.
Let's also examine hedge fund activity in other stocks similar to FTS International, Inc. (NYSE:FTSI). These stocks are MYR Group Inc (NASDAQ:MYRG), First Foundation Inc (NASDAQ:FFWM), Movado Group, Inc (NYSE:MOV), and Viomi Technology Co., Ltd (NASDAQ:VIOT). This group of stocks' market valuations are closest to FTSI's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MYRG,11,25997,-4 FFWM,10,77057,-1 MOV,20,42693,-3 VIOT,3,24349,0 Average,11,42524,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $28 million in FTSI's case. Movado Group, Inc (NYSE:MOV) is the most popular stock in this table. On the other hand Viomi Technology Co., Ltd (NASDAQ:VIOT) is the least popular one with only 3 bullish hedge fund positions. FTS International, Inc. (NYSE:FTSI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately FTSI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on FTSI were disappointed as the stock returned -59.9% during the third 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.