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First Data Corp (FDC): Hedge Funds Can’t Get Enough

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We can judge whether First Data Corp (NYSE:FDC) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, research shows that these picks historically outperformed the market when we factor in known risk factors.

Is First Data Corp (NYSE:FDC) a bargain? The smart money is actually becoming hopeful. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings improved by 3 recently. At the end of this article we will also compare FDC to other stocks including Cenovus Energy Inc (USA) (NYSE:CVE), Pembina Pipeline Corp (NYSE:PBA), and Ameren Corp (NYSE:AEE) to get a better sense of its popularity.

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We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

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What does the smart money think about First Data Corp (NYSE:FDC)?

At Q3’s end, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a 9% rise from the previous quarter. The graph below displays the number of hedge funds with bullish position in FDC over the last 5 quarters, which shows a rapid ascent for the stock, which went public in Q4 2015. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

HedgeFundSentimentChart

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Leon Cooperman’s Omega Advisors has the number one position in First Data Corp (NYSE:FDC), worth close to $170.5 million, amounting to 5.3% of its total 13F portfolio. On Omega Advisors’ heels is Brahman Capital, led by Peter Adam Hochfelder, holding a $152 million position; the fund has 5.3% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism comprise Larry Robbins’ Glenview Capital, Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management, and Richard Barrera’s Roystone Capital Partners. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

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