The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Fidelity National Information Services Inc. (NYSE:FIS) and determine whether the smart money was really smart about this stock.
Fidelity National Information Services Inc. (NYSE:FIS) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged and stood at its all time high. The stock was in 105 hedge funds' portfolios at the end of March. Our calculations also showed that FIS ranked 17th among the 30 most popular stocks among hedge funds (click for Q1 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_339739" align="aligncenter" width="393"] Ricky Sandler of Eminence Capital[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to take a look at the new hedge fund action encompassing Fidelity National Information Services Inc. (NYSE:FIS).
What does smart money think about Fidelity National Information Services Inc. (NYSE:FIS)?
Heading into the second quarter of 2020, a total of 105 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FIS over the last 18 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
The largest stake in Fidelity National Information Services Inc. (NYSE:FIS) was held by Citadel Investment Group, which reported holding $627.4 million worth of stock at the end of September. It was followed by Melvin Capital Management with a $584.3 million position. Other investors bullish on the company included Farallon Capital, Cantillon Capital Management, and Viking Global. In terms of the portfolio weights assigned to each position Caldera Capital allocated the biggest weight to Fidelity National Information Services Inc. (NYSE:FIS), around 19.8% of its 13F portfolio. Clearfield Capital is also relatively very bullish on the stock, earmarking 14.95 percent of its 13F equity portfolio to FIS.
Seeing as Fidelity National Information Services Inc. (NYSE:FIS) has experienced a decline in interest from the entirety of the hedge funds we track, it's easy to see that there is a sect of fund managers who sold off their positions entirely heading into Q4. It's worth mentioning that Larry Robbins's Glenview Capital dumped the biggest stake of the "upper crust" of funds tracked by Insider Monkey, totaling close to $55.3 million in stock, and Doug Gordon, Jon Hilsabeck and Don Jabro's Shellback Capital was right behind this move, as the fund said goodbye to about $54.4 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks similar to Fidelity National Information Services Inc. (NYSE:FIS). These stocks are Diageo plc (NYSE:DEO), Sony Corporation (NYSE:SNE), T-Mobile US, Inc. (NASDAQ:TMUS), and Altria Group Inc (NYSE:MO). This group of stocks' market values resemble FIS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DEO,17,621500,0 SNE,28,461322,2 TMUS,65,1645711,4 MO,46,1439983,-8 Average,39,1042129,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 39 hedge funds with bullish positions and the average amount invested in these stocks was $1042 million. That figure was $8378 million in FIS's case. T-Mobile US, Inc. (NASDAQ:TMUS) is the most popular stock in this table. On the other hand Diageo plc (NYSE:DEO) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Fidelity National Information Services Inc. (NYSE:FIS) is more popular among hedge funds. 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 13.3% in 2020 through June 25th and still beat the market by 16.8 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 9.8% during the second quarter (through June 25th) 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.
Disclosure: None. This article was originally published at Insider Monkey.