Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the third quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Franklin Resources, Inc. (NYSE:BEN) based on that data.
Franklin Resources, Inc. (NYSE:BEN) has experienced an increase in enthusiasm from smart money of late. Our calculations also showed that BEN 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.
In the financial world there are dozens of methods market participants use to value publicly traded companies. A duo of the most useful methods are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the market by a significant amount (see the details here).
[caption id="attachment_256532" align="aligncenter" width="225"] David Abrams of Abrams Capital Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to check out the latest hedge fund action regarding Franklin Resources, Inc. (NYSE:BEN).
How are hedge funds trading Franklin Resources, Inc. (NYSE:BEN)?
At Q3's end, a total of 35 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 40% from the second quarter of 2019. On the other hand, there were a total of 29 hedge funds with a bullish position in BEN a year ago. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Abrams Capital Management held the most valuable stake in Franklin Resources, Inc. (NYSE:BEN), which was worth $282 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $64.4 million worth of shares. Millennium Management, Polaris Capital Management, 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 Abrams Capital Management allocated the biggest weight to Franklin Resources, Inc. (NYSE:BEN), around 7.9% of its portfolio. Moerus Capital Management is also relatively very bullish on the stock, designating 7.21 percent of its 13F equity portfolio to BEN.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Millennium Management, managed by Israel Englander, assembled the most valuable position in Franklin Resources, Inc. (NYSE:BEN). Millennium Management had $47.3 million invested in the company at the end of the quarter. Ray Dalio's Bridgewater Associates also made a $13 million investment in the stock during the quarter. The following funds were also among the new BEN investors: Scott Wallace's Wallace Capital Management, Lee Ainslie's Maverick Capital, and Brandon Haley's Holocene Advisors.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Franklin Resources, Inc. (NYSE:BEN) but similarly valued. We will take a look at Darden Restaurants, Inc. (NYSE:DRI), Dover Corporation (NYSE:DOV), Align Technology, Inc. (NASDAQ:ALGN), and MGM Resorts International (NYSE:MGM). This group of stocks' market caps are closest to BEN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DRI,28,812020,4 DOV,30,731406,-2 ALGN,34,1496709,-7 MGM,48,2194471,13 Average,35,1308652,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $1309 million. That figure was $604 million in BEN's case. MGM Resorts International (NYSE:MGM) is the most popular stock in this table. On the other hand Darden Restaurants, Inc. (NYSE:DRI) is the least popular one with only 28 bullish hedge fund positions. Franklin Resources, Inc. (NYSE:BEN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately BEN wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); BEN investors were disappointed as the stock returned -4.7% 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.