Is Federal Signal Corporation (FSS) A Good Stock To Buy?

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Due to the fact that Federal Signal Corporation (NYSE:FSS) has witnessed falling interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few hedge funds that slashed their full holdings heading into Q4. It’s worth mentioning that Neil Chriss’s Hutchin Hill Capital dropped the largest investment of the “upper crust” of funds watched by Insider Monkey, comprising about $1 million in call options. Matthew Hulsizer’s fund, PEAK6 Capital Management, also dropped its call options, about $0.4 million worth of. These moves are intriguing to say the least, as total hedge fund interest was cut by 2 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Federal Signal Corporation (NYSE:FSS) but similarly valued. These stocks are Teladoc Inc (NYSE:TDOC), Pretium Resources Inc (NYSE:PVG), FTD Companies Inc (NASDAQ:FTD), and Caesars Entertainment Corp (NASDAQ:CZR). All of these stocks’ market caps resemble FSS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TDOC 14 96972 12
PVG 12 73523 0
FTD 20 123144 4
CZR 23 254293 1

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $137 million. That figure was $134 million in FSS’s case. Caesars Entertainment Corp (NASDAQ:CZR) is the most popular stock in this table, while Pretium Resources Inc (NYSE:PVG) is the least laggard with only 12 bullish hedge fund positions. Federal Signal Corporation (NYSE:FSS) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CZR might be a better candidate to consider a long position.

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