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Were Hedge Funds Right About Fluor Corporation (FLR)?

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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Fluor Corporation (NYSE:FLR).

Fluor Corporation (NYSE:FLR) was in 17 hedge funds' portfolios at the end of March. The all time high for this statistic is 29. FLR has seen a decrease in enthusiasm from smart money in recent months. There were 20 hedge funds in our database with FLR holdings at the end of December. Our calculations also showed that FLR 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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

David Nierenberg Nierenberg Investment Management
David Nierenberg Nierenberg Investment Management

David Nierenberg of Nierenberg Investment Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. Keeping this in mind we're going to take a look at the fresh hedge fund action surrounding Fluor Corporation (NYSE:FLR).

Do Hedge Funds Think FLR Is A Good Stock To Buy Now?

At the end of March, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from one quarter earlier. By comparison, 24 hedge funds held shares or bullish call options in FLR a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Two Sigma Advisors, managed by John Overdeck and David Siegel, holds the most valuable position in Fluor Corporation (NYSE:FLR). Two Sigma Advisors has a $48.1 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is D E Shaw, led by D. E. Shaw, holding a $42.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining professional money managers that are bullish consist of Robert Bishop's Impala Asset Management, David Nierenberg's Nierenberg Investment Management and Renaissance Technologies. In terms of the portfolio weights assigned to each position Nierenberg Investment Management allocated the biggest weight to Fluor Corporation (NYSE:FLR), around 15.49% of its 13F portfolio. AWH Capital is also relatively very bullish on the stock, earmarking 6.06 percent of its 13F equity portfolio to FLR.

Since Fluor Corporation (NYSE:FLR) has faced a decline in interest from the aggregate hedge fund industry, it's safe to say that there were a few hedge funds that elected to cut their full holdings last quarter. Intriguingly, Michael A. Price and Amos Meron's Empyrean Capital Partners dumped the biggest position of all the hedgies monitored by Insider Monkey, worth an estimated $18.6 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also said goodbye to its stock, about $1.9 million worth. These moves are interesting, as total hedge fund interest was cut by 3 funds last quarter.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Fluor Corporation (NYSE:FLR) but similarly valued. We will take a look at Apple Hospitality REIT Inc (NYSE:APLE), Casella Waste Systems Inc. (NASDAQ:CWST), Energizer Holdings, Inc. (NYSE:ENR), CNO Financial Group Inc (NYSE:CNO), Ingevity Corporation (NYSE:NGVT), Cathay General Bancorp (NASDAQ:CATY), and Turquoise Hill Resources Ltd (NYSE:TRQ). All of these stocks' market caps match FLR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position APLE,17,203355,1 CWST,20,107302,1 ENR,22,237518,-4 CNO,18,380221,1 NGVT,20,280427,-4 CATY,12,130599,2 TRQ,13,575312,1 Average,17.4,273533,-0.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.4 hedge funds with bullish positions and the average amount invested in these stocks was $274 million. That figure was $199 million in FLR's case. Energizer Holdings, Inc. (NYSE:ENR) is the most popular stock in this table. On the other hand Cathay General Bancorp (NASDAQ:CATY) is the least popular one with only 12 bullish hedge fund positions. Fluor Corporation (NYSE:FLR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FLR is 44.6. 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 negative signal and 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 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately FLR wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); FLR investors were disappointed as the stock returned -29.3% since the end of March (through 7/23) 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 most of these stocks already outperformed the market in 2021.

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