It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Franks International NV (NYSE:FI).
Franks International NV (NYSE:FI) was included in the equity portfolios of 12 funds from our database at the end of the third quarter of 2016. The company registered an increase in support from the world’s most successful money managers, as there had been 10 funds with FI holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Mueller Water Products, Inc. (NYSE:MWA), Artisan Partners Asset Management Inc (NYSE:APAM), and Suburban Propane Partners LP (NYSE:SPH) to gather more data points.
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We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
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Keeping this in mind, we’re going to check out the latest action surrounding Franks International NV (NYSE:FI).
What does the smart money think about Franks International NV (NYSE:FI)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, up by 20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FI over the last five quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Joel Greenblatt’s Gotham Asset Management has the most valuable position in Franks International NV (NYSE:FI), worth close to $8.5 million, amounting to 0.1% of its total 13F portfolio. On Gotham Asset Management’s heels is Phill Gross and Robert Atchinson’s Adage Capital Management, with a $5.6 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other professional money managers with similar optimism include Chuck Royce’s Royce & Associates and Cliff Asness’ AQR Capital Management. 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.
Consequently, specific money managers have jumped into Franks International NV (NYSE:FI) headfirst. Millennium Management, one of the 10 largest hedge funds in the world, initiated the most valuable position in Franks International NV (NYSE:FI). Millennium Management had $4.6 million invested in the company at the end of the quarter. Michael Platt and William Reeves’ BlueCrest Capital Mgmt. also initiated a $2 million position during the quarter. The only other fund with a new position in the stock is Roger Ibbotson’s Zebra Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Franks International NV (NYSE:FI) but similarly valued. We will take a look at Mueller Water Products, Inc. (NYSE:MWA), Artisan Partners Asset Management Inc (NYSE:APAM), Suburban Propane Partners LP (NYSE:SPH), and United Natural Foods, Inc. (NASDAQ:UNFI). This group of stocks’ market caps match FI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MWA | 20 | 180032 | 0 |
| APAM | 10 | 94947 | -1 |
| SPH | 4 | 6526 | -1 |
| UNFI | 21 | 162679 | 0 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $111 million, versus $36 million in FI’s case. United Natural Foods, Inc. (NASDAQ:UNFI) is the most popular stock in this table. On the other hand Suburban Propane Partners LP (NYSE:SPH) is the least popular one with only four funds having reported long positions. Franks International NV (NYSE:FI) 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 United Natural Foods might be a better candidate to consider taking a long position in.
Disclosure: none
