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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded HB Fuller Co (NYSE:FUL) based on those filings.
Is FUL a good stock to buy now? HB Fuller Co (NYSE:FUL) was in 16 hedge funds' portfolios at the end of September. The all time high for this statistic is 23. FUL investors should pay attention to an increase in enthusiasm from smart money lately. There were 10 hedge funds in our database with FUL holdings at the end of June. Our calculations also showed that FUL 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.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Gelband of ExodusPoint 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. With all of this in mind let's analyze the new hedge fund action surrounding HB Fuller Co (NYSE:FUL).
Do Hedge Funds Think FUL Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 60% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FUL over the last 21 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Claus Moller's P2 Capital Partners has the number one position in HB Fuller Co (NYSE:FUL), worth close to $78.1 million, comprising 6.1% of its total 13F portfolio. The second most bullish fund manager is Mario Gabelli of GAMCO Investors, with a $25.1 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish comprise Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Noam Gottesman's GLG Partners and Jonathan Barrett and Paul Segal's Luminus Management. In terms of the portfolio weights assigned to each position P2 Capital Partners allocated the biggest weight to HB Fuller Co (NYSE:FUL), around 6.11% of its 13F portfolio. Luminus Management is also relatively very bullish on the stock, dishing out 1.13 percent of its 13F equity portfolio to FUL.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into HB Fuller Co (NYSE:FUL) headfirst. Luminus Management, managed by Jonathan Barrett and Paul Segal, created the most outsized position in HB Fuller Co (NYSE:FUL). Luminus Management had $4.9 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $2 million position during the quarter. The following funds were also among the new FUL investors: Michael Gelband's ExodusPoint Capital, Paul Tudor Jones's Tudor Investment Corp, and Benjamin A. Smith's Laurion Capital Management.
Let's also examine hedge fund activity in other stocks similar to HB Fuller Co (NYSE:FUL). These stocks are Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS), Tri Pointe Group Inc (NYSE:TPH), UMB Financial Corporation (NASDAQ:UMBF), Park Hotels & Resorts Inc. (NYSE:PK), Cornerstone OnDemand, Inc. (NASDAQ:CSOD), PJT Partners Inc (NYSE:PJT), and Macquarie Infrastructure Corporation (NYSE:MIC). This group of stocks' market values are similar to FUL's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KTOS,14,31213,-8 TPH,31,257365,0 UMBF,17,75481,2 PK,17,76710,-4 CSOD,24,555427,-7 PJT,16,100618,-5 MIC,31,519679,-7 Average,21.4,230928,-4.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.4 hedge funds with bullish positions and the average amount invested in these stocks was $231 million. That figure was $141 million in FUL's case. Tri Pointe Group Inc (NYSE:TPH) is the most popular stock in this table. On the other hand Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS) is the least popular one with only 14 bullish hedge fund positions. HB Fuller Co (NYSE:FUL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FUL is 36.8. 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. A small number of hedge funds were also right about betting on FUL as the stock returned 11.7% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.