Did Hedge Funds Drop The Ball On FleetCor Technologies, Inc. (FLT) ?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their March 31 holdings, data that is available nowhere else. Should you consider FleetCor Technologies, Inc. (NYSE:FLT) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

FleetCor Technologies, Inc. (NYSE:FLT) has experienced an increase in enthusiasm from smart money of late. FLT was in 34 hedge funds’ portfolios at the end of March. There were 33 hedge funds in our database with FLT positions at the end of the previous quarter. Our calculations also showed that flt isn’t among the 30 most popular stocks among hedge funds.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 40 percentage points since May 2014 through May 30, 2019 (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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

Chase Coleman Tiger Global Management

Let’s take a look at the latest hedge fund action encompassing FleetCor Technologies, Inc. (NYSE:FLT).

What have hedge funds been doing with FleetCor Technologies, Inc. (NYSE:FLT)?

At Q1’s end, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards FLT over the last 15 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

No of Hedge Funds with FLT Positions

According to Insider Monkey’s hedge fund database, Chase Coleman’s Tiger Global Management has the biggest position in FleetCor Technologies, Inc. (NYSE:FLT), worth close to $425.9 million, corresponding to 2.4% of its total 13F portfolio. Sitting at the No. 2 spot is Steadfast Capital Management, managed by Robert Pitts, which holds a $255.3 million position; 4% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism contain Andrew Immerman and Jeremy Schiffman’s Palestra Capital Management, Joel Ramin’s 12 West Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

As aggregate interest increased, some big names have jumped into FleetCor Technologies, Inc. (NYSE:FLT) headfirst. Junto Capital Management, managed by James Parsons, established the most outsized position in FleetCor Technologies, Inc. (NYSE:FLT). Junto Capital Management had $61.6 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also made a $57.8 million investment in the stock during the quarter. The other funds with brand new FLT positions are Jeffrey Talpins’s Element Capital Management, Jim Simons’s Renaissance Technologies, and Stanley Druckenmiller’s Duquesne Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as FleetCor Technologies, Inc. (NYSE:FLT) but similarly valued. These stocks are Hewlett Packard Enterprise Company (NYSE:HPE), Rockwell Automation Inc. (NYSE:ROK), Boston Properties, Inc. (NYSE:BXP), and Ulta Beauty, Inc. (NASDAQ:ULTA). This group of stocks’ market valuations are closest to FLT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HPE 30 967419 1
ROK 28 534625 -7
BXP 27 572101 10
ULTA 43 994415 1
Average 32 767140 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 32 hedge funds with bullish positions and the average amount invested in these stocks was $767 million. That figure was $1734 million in FLT’s case. Ulta Beauty, Inc. (NASDAQ:ULTA) is the most popular stock in this table. On the other hand Boston Properties, Inc. (NYSE:BXP) is the least popular one with only 27 bullish hedge fund positions. FleetCor Technologies, Inc. (NYSE:FLT) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on FLT as the stock returned 5.7% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.