Were Hedge Funds Right About Four Corners Property Trust, Inc. (FCPT)?
We at Insider Monkey have gone over 866 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st. In this article, we look at what those funds think of Four Corners Property Trust, Inc. (NYSE:FCPT) based on that data.
Four Corners Property Trust, Inc. (NYSE:FCPT) was in 18 hedge funds' portfolios at the end of March. The all time high for this statistic is 25. FCPT investors should be aware of an increase in support from the world's most elite money managers in recent months. There were 12 hedge funds in our database with FCPT positions at the end of the fourth quarter. Our calculations also showed that FCPT 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.
Peter Rathjens of Arrowstreet Capital
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Do Hedge Funds Think FCPT Is A Good Stock To Buy Now?
At first quarter's end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in FCPT a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Eduardo Abush's Waterfront Capital Partners has the most valuable position in Four Corners Property Trust, Inc. (NYSE:FCPT), worth close to $39.3 million, corresponding to 3.6% of its total 13F portfolio. On Waterfront Capital Partners's heels is Millennium Management, managed by Israel Englander, which holds a $21.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that hold long positions contain Ken Griffin's Citadel Investment Group, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Jed Nussdorf's Soapstone Capital. In terms of the portfolio weights assigned to each position Soapstone Capital allocated the biggest weight to Four Corners Property Trust, Inc. (NYSE:FCPT), around 3.57% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, designating 3.56 percent of its 13F equity portfolio to FCPT.
As industrywide interest jumped, key money managers have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, established the biggest position in Four Corners Property Trust, Inc. (NYSE:FCPT). Balyasny Asset Management had $5 million invested in the company at the end of the quarter. Noam Gottesman's GLG Partners also initiated a $1.8 million position during the quarter. The other funds with brand new FCPT positions are Renaissance Technologies, Paul Tudor Jones's Tudor Investment Corp, and Michael Hintze's CQS Cayman LP.
Let's now take a look at hedge fund activity in other stocks similar to Four Corners Property Trust, Inc. (NYSE:FCPT). We will take a look at Lordstown Motors Corp. (NASDAQ:RIDE), Crestwood Equity Partners LP (NYSE:CEQP), Cavco Industries, Inc. (NASDAQ:CVCO), Bally's Corporation (NYSE:BALY), NetScout Systems, Inc. (NASDAQ:NTCT), TPI Composites, Inc. (NASDAQ:TPIC), and Sonic Automotive Inc (NYSE:SAH). All of these stocks' market caps resemble FCPT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RIDE,12,27284,-5 CEQP,5,9080,3 CVCO,22,197921,2 BALY,18,415596,-7 NTCT,11,115827,4 TPIC,18,124306,-9 SAH,17,102454,-1 Average,14.7,141781,-1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.7 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $116 million in FCPT's case. Cavco Industries, Inc. (NASDAQ:CVCO) is the most popular stock in this table. On the other hand Crestwood Equity Partners LP (NYSE:CEQP) is the least popular one with only 5 bullish hedge fund positions. Four Corners Property Trust, Inc. (NYSE:FCPT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FCPT is 69.8. 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 28.5% in 2021 through July 23rd and beat the market again by 10.1 percentage points. Unfortunately FCPT wasn't nearly as popular as these 5 stocks and hedge funds that were betting on FCPT were disappointed as the stock returned 7.4% 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
