Investing in small cap stocks has historically been a way to outperform the market, as small cap companies typically grow faster on average than the blue chips. That outperformance comes with a price, however, as there are occasional periods of higher volatility. The last 12 months is one of those periods, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points. Given that the funds we track tend to have a disproportionate amount of their portfolios in smaller cap stocks, they have seen some volatility in their portfolios too. Actually their moves are potentially one of the factors that contributed to this volatility. In this article, we use our extensive database of hedge fund holdings to find out what the smart money thinks of FleetCor Technologies, Inc. (NYSE:FLT).
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.
[caption id="attachment_26088" align="aligncenter" width="508"] Chase Coleman of Tiger Global[/caption]
Unlike some fund managers who are betting on Dow reaching 40000 in a year, 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 review the latest hedge fund action encompassing FleetCor Technologies, Inc. (NYSE:FLT).
What have hedge funds been doing with FleetCor Technologies, Inc. (NYSE:FLT)?
At the end of the second quarter, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from the previous quarter. By comparison, 33 hedge funds held shares or bullish call options in FLT a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Tiger Global Management LLC held the most valuable stake in FleetCor Technologies, Inc. (NYSE:FLT), which was worth $485.1 million at the end of the second quarter. On the second spot was Steadfast Capital Management which amassed $276.8 million worth of shares. Moreover, Arrowstreet Capital, Palestra Capital Management, and Echo Street Capital Management were also bullish on FleetCor Technologies, Inc. (NYSE:FLT), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key money managers were leading the bulls' herd. Winton Capital Management, managed by David Harding, assembled the biggest position in FleetCor Technologies, Inc. (NYSE:FLT). Winton Capital Management had $27.8 million invested in the company at the end of the quarter. Joel Greenblatt's Gotham Asset Management also initiated a $18 million position during the quarter. The other funds with brand new FLT positions are Michael Kharitonov and Jon David McAuliffe's Voleon Capital, D. E. Shaw's D E Shaw, and Louis Bacon's Moore Global Investments.
Let's check out hedge fund activity in other stocks similar to FleetCor Technologies, Inc. (NYSE:FLT). These stocks are Veeva Systems Inc (NYSE:VEEV), Cerner Corporation (NASDAQ:CERN), Pioneer Natural Resources Company (NYSE:PXD), and Eversource Energy (NYSE:ES). All of these stocks' market caps are closest to FLT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VEEV,35,1355258,8 CERN,29,1211492,0 PXD,48,841904,-7 ES,21,780262,5 Average,33.25,1047229,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.25 hedge funds with bullish positions and the average amount invested in these stocks was $1047 million. That figure was $1863 million in FLT's case. Pioneer Natural Resources Company (NYSE:PXD) is the most popular stock in this table. On the other hand Eversource Energy (NYSE:ES) is the least popular one with only 21 bullish hedge fund positions. FleetCor Technologies, Inc. (NYSE:FLT) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on FLT, though not to the same extent, as the stock returned 2.1% during the third quarter and outperformed the market as well. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.