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 Federated Hermes, Inc. (NYSE:FHI).
Federated Hermes, Inc. (NYSE:FHI) was in 28 hedge funds' portfolios at the end of the first quarter of 2020. FHI investors should pay attention to a decrease in activity from the world's largest hedge funds in recent months. There were 29 hedge funds in our database with FHI positions at the end of the previous quarter. Our calculations also showed that FHI 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.
To the average investor there are a multitude of tools stock market investors employ to evaluate publicly traded companies. A duo of the best tools are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the top money managers can beat the broader indices by a solid amount (see the details here).
[caption id="attachment_30621" align="aligncenter" width="392"] Cliff Asness of AQR Capital Management[/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. With all of this in mind we're going to take a gander at the new hedge fund action encompassing Federated Hermes, Inc. (NYSE:FHI).
Hedge fund activity in Federated Hermes, Inc. (NYSE:FHI)
Heading into the second quarter of 2020, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the fourth quarter of 2019. By comparison, 13 hedge funds held shares or bullish call options in FHI a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, AQR Capital Management was the largest shareholder of Federated Hermes, Inc. (NYSE:FHI), with a stake worth $18 million reported as of the end of September. Trailing AQR Capital Management was Citadel Investment Group, which amassed a stake valued at $16.9 million. Marshall Wace LLP, Arrowstreet Capital, and Renaissance Technologies 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 Hourglass Capital allocated the biggest weight to Federated Hermes, Inc. (NYSE:FHI), around 1.71% of its 13F portfolio. Prospector Partners is also relatively very bullish on the stock, setting aside 0.45 percent of its 13F equity portfolio to FHI.
Due to the fact that Federated Hermes, Inc. (NYSE:FHI) has witnessed a decline in interest from the smart money, it's easy to see that there is a sect of money managers that elected to cut their positions entirely last quarter. Interestingly, Robert Pohly's Samlyn Capital dumped the biggest stake of all the hedgies followed by Insider Monkey, worth about $39.7 million in stock. Anand Parekh's fund, Alyeska Investment Group, also said goodbye to its stock, about $29.8 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 1 funds last quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Federated Hermes, Inc. (NYSE:FHI) but similarly valued. These stocks are Louisiana-Pacific Corporation (NYSE:LPX), Telephone & Data Systems, Inc. (NYSE:TDS), Trinity Industries, Inc. (NYSE:TRN), and Altair Engineering Inc. (NASDAQ:ALTR). This group of stocks' market caps match FHI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LPX,26,326375,-3 TDS,21,149832,-1 TRN,18,621944,-9 ALTR,9,195585,-1 Average,18.5,323434,-3.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $323 million. That figure was $115 million in FHI's case. Louisiana-Pacific Corporation (NYSE:LPX) is the most popular stock in this table. On the other hand Altair Engineering Inc. (NASDAQ:ALTR) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Federated Hermes, Inc. (NYSE:FHI) is more popular among hedge funds. 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 and still beat the market by 13.2 percentage points. Unfortunately FHI wasn't nearly as popular as these 10 stocks and hedge funds that were betting on FHI were disappointed as the stock returned 17.7% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.