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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. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Fidelity National Information Services Inc. (NYSE:FIS).
Is Fidelity National Information Services Inc. (NYSE:FIS) a healthy stock for your portfolio? Hedge funds were turning less bullish. The number of bullish hedge fund bets fell by 14 lately. Fidelity National Information Services Inc. (NYSE:FIS) was in 74 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 111. Our calculations also showed that FIS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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' 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 S&P 500 ETFs by 115 percentage points since March 2017 (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.
Dan Loeb of Third Point
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let's take a glance at the recent hedge fund action regarding Fidelity National Information Services Inc. (NYSE:FIS).
Do Hedge Funds Think FIS Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 74 of the hedge funds tracked by Insider Monkey were long this stock, a change of -16% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in FIS over the last 23 quarters. With hedge funds' capital changing hands, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
The largest stake in Fidelity National Information Services Inc. (NYSE:FIS) was held by Viking Global, which reported holding $1349.6 million worth of stock at the end of December. It was followed by Select Equity Group with a $977.8 million position. Other investors bullish on the company included Cantillon Capital Management, Steadfast Capital Management, and Farallon Capital. In terms of the portfolio weights assigned to each position Park Presidio Capital allocated the biggest weight to Fidelity National Information Services Inc. (NYSE:FIS), around 8.81% of its 13F portfolio. Incline Global Management is also relatively very bullish on the stock, earmarking 7.51 percent of its 13F equity portfolio to FIS.
Seeing as Fidelity National Information Services Inc. (NYSE:FIS) has witnessed bearish sentiment from the smart money, it's easy to see that there were a few fund managers that elected to cut their full holdings in the first quarter. Interestingly, Lone Pine Capital said goodbye to the biggest stake of the 750 funds watched by Insider Monkey, totaling an estimated $396.1 million in stock, and Dan Loeb's Third Point was right behind this move, as the fund sold off about $302.2 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 14 funds in the first quarter.
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 Lam Research Corporation (NASDAQ:LRCX), S&P Global Inc. (NYSE:SPGI), Coupang, Inc. (NYSE:CPNG), Cigna Corporation (NYSE:CI), U.S. Bancorp (NYSE:USB), General Motors Company (NYSE:GM), and Mondelez International Inc (NASDAQ:MDLZ). 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 LRCX,54,3164975,-2 SPGI,66,6245296,-9 CPNG,40,21669289,40 CI,53,2497828,-4 USB,43,8335231,-17 GM,86,8053011,16 MDLZ,45,2845001,-5 Average,55.3,7544376,2.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 55.3 hedge funds with bullish positions and the average amount invested in these stocks was $7544 million. That figure was $8251 million in FIS's case. General Motors Company (NYSE:GM) is the most popular stock in this table. On the other hand Coupang, Inc. (NYSE:CPNG) is the least popular one with only 40 bullish hedge fund positions. Fidelity National Information Services Inc. (NYSE:FIS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FIS is 48. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.8% in 2021 through August 6th and beat the market again by 6.7 percentage points. Unfortunately FIS wasn't nearly as popular as these 5 stocks and hedge funds that were betting on FIS were disappointed as the stock returned -4.6% since the end of March (through 8/6) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.