The latest 13F reporting period has come and gone, and 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. Now, 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 you are going to find out whether hedge funds thoughtFranco-Nevada Corporation (NYSE:FNV) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Franco-Nevada Corporation (NYSE:FNV) was in 21 hedge funds' portfolios at the end of March. FNV investors should pay attention to a decrease in support from the world's most elite money managers of late. There were 24 hedge funds in our database with FNV positions at the end of the previous quarter. Our calculations also showed that FNV isn't 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Joel Greenblatt of Gotham Asset Management
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 tripled 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now we're going to check out the recent hedge fund action regarding Franco-Nevada Corporation (NYSE:FNV).
What have hedge funds been doing with Franco-Nevada Corporation (NYSE:FNV)?
At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FNV over the last 18 quarters. 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 publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the most valuable position in Franco-Nevada Corporation (NYSE:FNV). Renaissance Technologies has a $488.1 million position in the stock, comprising 0.5% of its 13F portfolio. On Renaissance Technologies's heels is Murray Stahl of Horizon Asset Management, with a $111.8 million position; 4.9% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish consist of Eric Sprott's Sprott Asset Management, Ken Griffin's Citadel Investment Group and D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Franco-Nevada Corporation (NYSE:FNV), around 8.11% of its 13F portfolio. Horizon Asset Management is also relatively very bullish on the stock, earmarking 4.95 percent of its 13F equity portfolio to FNV.
Due to the fact that Franco-Nevada Corporation (NYSE:FNV) has witnessed falling interest from the smart money, it's easy to see that there was a specific group of fund managers that elected to cut their entire stakes last quarter. At the top of the heap, Ryan Caldwell's Chiron Investment Management cut the biggest stake of the "upper crust" of funds monitored by Insider Monkey, totaling an estimated $22.4 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund dumped about $0.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 3 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Franco-Nevada Corporation (NYSE:FNV) but similarly valued. We will take a look at Welltower Inc. (NYSE:WELL), TD Ameritrade Holding Corp. (NASDAQ:AMTD), Entergy Corporation (NYSE:ETR), and McCormick & Company, Incorporated (NYSE:MKC). This group of stocks' market valuations match FNV's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WELL,25,313164,1 AMTD,46,1250217,-4 ETR,34,1036847,3 MKC,31,280968,7 Average,34,720299,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $720 million. That figure was $896 million in FNV's case. TD Ameritrade Holding Corp. (NASDAQ:AMTD) is the most popular stock in this table. On the other hand Welltower Inc. (NYSE:WELL) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks Franco-Nevada Corporation (NYSE:FNV) is even less popular than WELL. Hedge funds clearly dropped the ball on FNV as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 18.6% in 2020 through July 27th and still beat the market by 17.1 percentage points. A small number of hedge funds were also right about betting on FNV as the stock returned 64.5% since the end of March and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.