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Hedge Funds Are Piling Into Comfort Systems USA, Inc. (FIX)

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Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Comfort Systems USA, Inc. (NYSE:FIX).

Comfort Systems USA, Inc. (NYSE:FIX) has experienced an increase in enthusiasm from smart money in recent months. Comfort Systems USA, Inc. (NYSE:FIX) was in 24 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 28. There were 19 hedge funds in our database with FIX positions at the end of the first quarter. Our calculations also showed that FIX isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

In the financial world there are plenty of metrics stock market investors use to assess publicly traded companies. Two of the best metrics are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the top hedge fund managers can outperform the market by a superb amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Martin Whitman Third Avenue Management Marty Whitman
Martin Whitman Third Avenue Management Marty Whitman

Martin Whitman of Third Avenue Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we're going to go over the key hedge fund action regarding Comfort Systems USA, Inc. (NYSE:FIX).

Do Hedge Funds Think FIX Is A Good Stock To Buy Now?

At second quarter's end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 26% from one quarter earlier. By comparison, 22 hedge funds held shares or bullish call options in FIX 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, Royce & Associates held the most valuable stake in Comfort Systems USA, Inc. (NYSE:FIX), which was worth $32.1 million at the end of the second quarter. On the second spot was Impax Asset Management which amassed $8.3 million worth of shares. Divisar Capital, Renaissance Technologies, and Third Avenue 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 Divisar Capital allocated the biggest weight to Comfort Systems USA, Inc. (NYSE:FIX), around 2.72% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, earmarking 0.78 percent of its 13F equity portfolio to FIX.

As one would reasonably expect, some big names have jumped into Comfort Systems USA, Inc. (NYSE:FIX) headfirst. Tudor Investment Corp, managed by Paul Tudor Jones, created the most outsized position in Comfort Systems USA, Inc. (NYSE:FIX). Tudor Investment Corp had $1.2 million invested in the company at the end of the quarter. Joel Greenblatt's Gotham Asset Management also made a $0.5 million investment in the stock during the quarter. The following funds were also among the new FIX investors: Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors, Michael Gelband's ExodusPoint Capital, and Bruce Kovner's Caxton Associates LP.

Let's now take a look at hedge fund activity in other stocks similar to Comfort Systems USA, Inc. (NYSE:FIX). We will take a look at Abercrombie & Fitch Co. (NYSE:ANF), Mr. Cooper Group Inc. (NASDAQ:COOP), Laureate Education, Inc. (NASDAQ:LAUR), Nu Skin Enterprises, Inc. (NYSE:NUS), FormFactor, Inc. (NASDAQ:FORM), GrowGeneration Corp. (NASDAQ:GRWG), and Arcosa, Inc. (NYSE:ACA). This group of stocks' market values match FIX's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ANF,32,564862,12 COOP,28,660134,4 LAUR,20,203841,-1 NUS,20,298814,1 FORM,20,167474,3 GRWG,17,128612,-1 ACA,12,155930,-5 Average,21.3,311381,1.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.3 hedge funds with bullish positions and the average amount invested in these stocks was $311 million. That figure was $81 million in FIX's case. Abercrombie & Fitch Co. (NYSE:ANF) is the most popular stock in this table. On the other hand Arcosa, Inc. (NYSE:ACA) is the least popular one with only 12 bullish hedge fund positions. Comfort Systems USA, Inc. (NYSE:FIX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FIX is 65.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on FIX as the stock returned 7% since the end of Q2 (through 10/22) 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.