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. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Fluor Corporation (NYSE:FLR) based on those filings.
Fluor Corporation (NYSE:FLR) was in 18 hedge funds' portfolios at the end of September. FLR investors should be aware of a decrease in hedge fund interest lately. There were 21 hedge funds in our database with FLR holdings at the end of the previous quarter. Our calculations also showed that FLR 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.
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 has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_30600" align="aligncenter" width="520"] Bruce Kovner of Caxton Associates[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's take a gander at the key hedge fund action regarding Fluor Corporation (NYSE:FLR).
What does smart money think about Fluor Corporation (NYSE:FLR)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FLR over the last 17 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
More specifically, D E Shaw was the largest shareholder of Fluor Corporation (NYSE:FLR), with a stake worth $52.2 million reported as of the end of September. Trailing D E Shaw was Two Sigma Advisors, which amassed a stake valued at $47.3 million. Millennium Management, Ariel Investments, and AQR Capital Management 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 Ariel Investments allocated the biggest weight to Fluor Corporation (NYSE:FLR), around 0.42% of its 13F portfolio. Bourgeon Capital is also relatively very bullish on the stock, dishing out 0.26 percent of its 13F equity portfolio to FLR.
Judging by the fact that Fluor Corporation (NYSE:FLR) has experienced declining sentiment from hedge fund managers, it's safe to say that there is a sect of fund managers that elected to cut their full holdings heading into Q4. Intriguingly, Jonathan Barrett and Paul Segal's Luminus Management dumped the largest investment of the "upper crust" of funds monitored by Insider Monkey, valued at about $27 million in call options, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund dropped about $4.8 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 3 funds heading into Q4.
Let's also examine hedge fund activity in other stocks similar to Fluor Corporation (NYSE:FLR). We will take a look at Brooks Automation, Inc. (NASDAQ:BRKS), Brandywine Realty Trust (NYSE:BDN), M.D.C. Holdings, Inc. (NYSE:MDC), and Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA). All of these stocks' market caps match FLR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BRKS,12,153378,-1 BDN,17,121356,3 MDC,17,114744,0 IBA,4,42960,1 Average,12.5,108110,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $108 million. That figure was $210 million in FLR's case. Brandywine Realty Trust (NYSE:BDN) is the most popular stock in this table. On the other hand Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Fluor Corporation (NYSE:FLR) is more popular among hedge funds. 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. Unfortunately FLR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on FLR were disappointed as the stock returned -8.8% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.