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Hedge Funds Aren’t Done Buying Fastenal Company (FAST)

Debasis Saha

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Fastenal Company (NASDAQ:FAST).

Fastenal Company (NASDAQ:FAST) investors should be aware of an increase in hedge fund interest of late. Our calculations also showed that FAST isn't among the 30 most popular stocks among hedge funds (click for Q1 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.

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 monthly stock picks returned 87% since March 2017 and outperformed the S&P 500 ETFs by more than 51 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

[caption id="attachment_255014" align="aligncenter" width="400"] Clint Carlson of Carlson Capital[/caption]

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let's take a glance at the recent hedge fund action encompassing Fastenal Company (NASDAQ:FAST).

What does smart money think about Fastenal Company (NASDAQ:FAST)?

At Q1's end, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from one quarter earlier. By comparison, 21 hedge funds held shares or bullish call options in FAST a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Is FAST A Good Stock To Buy?

The largest stake in Fastenal Company (NASDAQ:FAST) was held by Route One Investment Company, which reported holding $272.1 million worth of stock at the end of September. It was followed by Cantillon Capital Management with a $192.7 million position. Other investors bullish on the company included Carlson Capital, Motley Fool Asset Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position Route One Investment Company allocated the biggest weight to Fastenal Company (NASDAQ:FAST), around 8.92% of its 13F portfolio. Unio Capital is also relatively very bullish on the stock, earmarking 4.07 percent of its 13F equity portfolio to FAST.

Consequently, some big names were leading the bulls' herd. Carlson Capital, managed by Clint Carlson, assembled the largest position in Fastenal Company (NASDAQ:FAST). Carlson Capital had $35.9 million invested in the company at the end of the quarter. Alexander Mitchell's Scopus Asset Management also made a $8.4 million investment in the stock during the quarter. The other funds with brand new FAST positions are Ken Griffin's Citadel Investment Group, Michael Cowley's Sandbar Asset Management, and Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management.

Let's also examine hedge fund activity in other stocks similar to Fastenal Company (NASDAQ:FAST). We will take a look at Interactive Brokers Group, Inc. (NASDAQ:IBKR), Fortis Inc. (NYSE:FTS), Wipro Limited (NYSE:WIT), and Corteva, Inc. (NYSE:CTVA). All of these stocks' market caps resemble FAST's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IBKR,22,779568,-7 FTS,15,347098,1 WIT,7,56972,-5 CTVA,36,509655,9 Average,20,423323,-0.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $423 million. That figure was $588 million in FAST's case. Corteva, Inc. (NYSE:CTVA) is the most popular stock in this table. On the other hand Wipro Limited (NYSE:WIT) is the least popular one with only 7 bullish hedge fund positions. Fastenal Company (NASDAQ:FAST) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on FAST as the stock returned 33% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.

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