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Were Hedge Funds Right About Fidelity National Information Services Inc. (FIS)?

Debasis Saha
·6 min read

In this article we will check out the progression of hedge fund sentiment towards Fidelity National Information Services Inc. (NYSE:FIS) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is Fidelity National Information Services Inc. (NYSE:FIS) a marvelous investment today? The best stock pickers were taking a bullish view. The number of long hedge fund bets advanced by 6 recently. Fidelity National Information Services Inc. (NYSE:FIS) was in 111 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 105. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FIS currently ranks 15th among the 30 most popular stocks among hedge funds (click for Q2 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.

If you'd ask most shareholders, hedge funds are viewed as slow, old financial vehicles of yesteryear. While there are over 8000 funds trading at present, We hone in on the upper echelon of this club, about 850 funds. It is estimated that this group of investors manage the majority of the hedge fund industry's total asset base, and by keeping track of their unrivaled stock picks, Insider Monkey has unearthed many investment strategies that have historically outpaced the broader indices. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Daniel Sundheim D1 Capital
Daniel Sundheim D1 Capital

Daniel Sundheim of D1 Capital Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Keeping this in mind we're going to check out the latest hedge fund action encompassing Fidelity National Information Services Inc. (NYSE:FIS).

How have hedgies been trading Fidelity National Information Services Inc. (NYSE:FIS)?

Heading into the third quarter of 2020, a total of 111 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FIS over the last 20 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is FIS A Good Stock To Buy?
Is FIS A Good Stock To Buy?

The largest stake in Fidelity National Information Services Inc. (NYSE:FIS) was held by Viking Global, which reported holding $900.3 million worth of stock at the end of September. It was followed by Cantillon Capital Management with a $548.9 million position. Other investors bullish on the company included D1 Capital Partners, Farallon Capital, and Third Point. In terms of the portfolio weights assigned to each position BlueSpruce Investments allocated the biggest weight to Fidelity National Information Services Inc. (NYSE:FIS), around 11.26% of its 13F portfolio. Atalan Capital is also relatively very bullish on the stock, earmarking 11.02 percent of its 13F equity portfolio to FIS.

With a general bullishness amongst the heavyweights, specific money managers have jumped into Fidelity National Information Services Inc. (NYSE:FIS) headfirst. MIG Capital, managed by Richard Merage, established the largest position in Fidelity National Information Services Inc. (NYSE:FIS). MIG Capital had $32 million invested in the company at the end of the quarter. Doug Gordon, Jon Hilsabeck and Don Jabro's Shellback Capital also initiated a $31.2 million position during the quarter. The other funds with new positions in the stock are Peter S. Park's Park West Asset Management, David Fiszel's Honeycomb Asset Management, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Fidelity National Information Services Inc. (NYSE:FIS) but similarly valued. We will take a look at BlackRock, Inc. (NYSE:BLK), Toronto-Dominion Bank (NYSE:TD), S&P Global Inc. (NYSE:SPGI), BP plc (NYSE:BP), Diageo plc (NYSE:DEO), Intuit Inc. (NASDAQ:INTU), and ServiceNow Inc (NYSE:NOW). This group of stocks' market valuations resemble FIS's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BLK,37,702091,-1 TD,15,155444,-4 SPGI,71,3024689,-2 BP,27,736756,-4 DEO,20,653839,3 INTU,53,1735265,-1 NOW,86,4949673,1 Average,44.1,1708251,-1.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 44.1 hedge funds with bullish positions and the average amount invested in these stocks was $1708 million. That figure was $8174 million in FIS's case. ServiceNow Inc (NYSE:NOW) is the most popular stock in this table. On the other hand Toronto-Dominion Bank (NYSE:TD) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Fidelity National Information Services Inc. (NYSE:FIS) is more popular among hedge funds. Our overall hedge fund sentiment score for FIS is 93. 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 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 29.2% in 2020 through October 16th and still beat the market by 19.7 percentage points. Unfortunately FIS wasn't nearly as popular as these 10 stocks and hedge funds that were betting on FIS were disappointed as the stock returned 7.6% since the end of the second quarter (through 10/16) 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.

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Disclosure: None. This article was originally published at Insider Monkey.

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