We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (read our latest 10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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 fourth 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 Fidelity National Financial Inc (NYSE:FNF) based on that data.
Fidelity National Financial Inc (NYSE:FNF) investors should pay attention to an increase in hedge fund sentiment in recent months. FNF was in 36 hedge funds' portfolios at the end of the fourth quarter of 2019. There were 30 hedge funds in our database with FNF positions at the end of the previous quarter. Our calculations also showed that FNF isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a multitude of methods investors have at their disposal to appraise their stock investments. Some of the most under-the-radar methods are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the best money managers can outclass the market by a very impressive margin (see the details here).
[caption id="attachment_30621" align="aligncenter" width="400"] Cliff Asness of AQR Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. Now let's check out the new hedge fund action surrounding Fidelity National Financial Inc (NYSE:FNF).
What have hedge funds been doing with Fidelity National Financial Inc (NYSE:FNF)?
At the end of the fourth quarter, a total of 36 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. On the other hand, there were a total of 28 hedge funds with a bullish position in FNF a year ago. With hedge funds' sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
The largest stake in Fidelity National Financial Inc (NYSE:FNF) was held by AQR Capital Management, which reported holding $94.2 million worth of stock at the end of September. It was followed by Nitorum Capital with a $70.9 million position. Other investors bullish on the company included D E Shaw, Two Sigma Advisors, and GLG Partners. In terms of the portfolio weights assigned to each position Nitorum Capital allocated the biggest weight to Fidelity National Financial Inc (NYSE:FNF), around 3.97% of its 13F portfolio. Third Avenue Management is also relatively very bullish on the stock, earmarking 1.17 percent of its 13F equity portfolio to FNF.
Now, some big names were breaking ground themselves. Renaissance Technologies created the most outsized position in Fidelity National Financial Inc (NYSE:FNF). Renaissance Technologies had $14.8 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle's Springbok Capital also made a $2.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Tudor Jones's Tudor Investment Corp, Matthew Tewksbury's Stevens Capital Management, and Renee Yao's Neo Ivy Capital.
Let's go over hedge fund activity in other stocks similar to Fidelity National Financial Inc (NYSE:FNF). These stocks are Cenovus Energy Inc (NYSE:CVE), J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT), Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH), and Raymond James Financial, Inc. (NYSE:RJF). All of these stocks' market caps resemble FNF's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CVE,31,578518,3 JBHT,28,321794,2 NCLH,38,1090154,4 RJF,28,750978,-1 Average,31.25,685361,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.25 hedge funds with bullish positions and the average amount invested in these stocks was $685 million. That figure was $357 million in FNF's case. Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH) is the most popular stock in this table. On the other hand J.B. Hunt Transport Services, Inc. (NASDAQ:JBHT) is the least popular one with only 28 bullish hedge fund positions. Fidelity National Financial Inc (NYSE:FNF) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately FNF wasn't nearly as popular as these 20 stocks and hedge funds that were betting on FNF were disappointed as the stock returned -37% during the same time period 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 this year.
Disclosure: None. This article was originally published at Insider Monkey.