Is FactSet Research Systems Inc. (NYSE:FDS) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
FactSet Research Systems Inc. (NYSE:FDS) has experienced an increase in support from the world's most elite money managers lately. FDS was in 19 hedge funds' portfolios at the end of June. There were 18 hedge funds in our database with FDS positions at the end of the previous quarter. Our calculations also showed that FDS isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 go over the key hedge fund action encompassing FactSet Research Systems Inc. (NYSE:FDS).
What does smart money think about FactSet Research Systems Inc. (NYSE:FDS)?
Heading into the third quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the first quarter of 2019. On the other hand, there were a total of 18 hedge funds with a bullish position in FDS 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.
The largest stake in FactSet Research Systems Inc. (NYSE:FDS) was held by Renaissance Technologies, which reported holding $133.5 million worth of stock at the end of March. It was followed by GLG Partners with a $65 million position. Other investors bullish on the company included Citadel Investment Group, Markel Gayner Asset Management, and Echo Street Capital Management.
As aggregate interest increased, key hedge funds were breaking ground themselves. Interval Partners, managed by Gregg Moskowitz, assembled the most valuable call position in FactSet Research Systems Inc. (NYSE:FDS). Interval Partners had $1.1 million invested in the company at the end of the quarter. Matthew Tewksbury's Stevens Capital Management also made a $0.8 million investment in the stock during the quarter. The other funds with brand new FDS positions are Michael Gelband's ExodusPoint Capital, Bruce Kovner's Caxton Associates LP, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as FactSet Research Systems Inc. (NYSE:FDS) but similarly valued. These stocks are Tiffany & Co. (NYSE:TIF), Sarepta Therapeutics Inc (NASDAQ:SRPT), Lennox International Inc. (NYSE:LII), and E*TRADE Financial Corporation (NASDAQ:ETFC). This group of stocks' market caps are closest to FDS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TIF,22,1455290,-8 SRPT,48,1466822,4 LII,21,120353,2 ETFC,43,1180517,0 Average,33.5,1055746,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 33.5 hedge funds with bullish positions and the average amount invested in these stocks was $1056 million. That figure was $346 million in FDS's case. Sarepta Therapeutics Inc (NASDAQ:SRPT) is the most popular stock in this table. On the other hand Lennox International Inc. (NYSE:LII) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks FactSet Research Systems Inc. (NYSE:FDS) is even less popular than LII. Hedge funds dodged a bullet by taking a bearish stance towards FDS. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately FDS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); FDS investors were disappointed as the stock returned -15% during the third 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.