The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on December 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and prominent investors' filings. In this article, we analyze how these elite funds and prominent investors traded FutureFuel Corp. (NYSE:FF) based on those filings.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Let's review the key hedge fund action encompassing FutureFuel Corp. (NYSE:FF).
How have hedgies been trading FutureFuel Corp. (NYSE:FF)?
Heading into the first quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FF over the last 14 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of FutureFuel Corp. (NYSE:FF), with a stake worth $32 million reported as of the end of December. Trailing Renaissance Technologies was Royce & Associates, which amassed a stake valued at $13.4 million. GLG Partners, Two Sigma Advisors, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, specific money managers were leading the bulls' herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most valuable position in FutureFuel Corp. (NYSE:FF). Arrowstreet Capital had $0.7 million invested in the company at the end of the quarter. Joel Greenblatt's Gotham Asset Management also made a $0.4 million investment in the stock during the quarter. The other funds with brand new FF positions are Ken Griffin's Citadel Investment Group, Jeffrey Talpins's Element Capital Management, and Peter Algert and Kevin Coldiron's Algert Coldiron Investors.
Let's now take a look at hedge fund activity in other stocks similar to FutureFuel Corp. (NYSE:FF). These stocks are UroGen Pharma Ltd. (NASDAQ:URGN), German American Bancorp., Inc. (NASDAQ:GABC), INTL Fcstone Inc (NASDAQ:INTL), and Victory Capital Holdings, Inc. (NASDAQ:VCTR). This group of stocks' market values resemble FF's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position URGN,12,142984,-1 GABC,4,6870,-1 INTL,13,73556,3 VCTR,10,42034,0 Average,9.75,66361,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $66 million. That figure was $57 million in FF's case. INTL Fcstone Inc (NASDAQ:INTL) is the most popular stock in this table. On the other hand German American Bancorp., Inc. (NASDAQ:GABC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks FutureFuel Corp. (NYSE:FF) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately FF wasn't nearly as popular as these 15 stock and hedge funds that were betting on FF were disappointed as the stock returned -9.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.