Did Hedge Funds Make The Right Call On Fiat Chrysler Automobiles NV (FCAU)?

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 thoughtFiat Chrysler Automobiles NV (NYSE:FCAU) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.

Is Fiat Chrysler Automobiles NV (NYSE:FCAU) a bargain? The best stock pickers were taking an optimistic view. The number of bullish hedge fund positions advanced by 2 recently. Our calculations also showed that FCAU 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.

At the moment there are dozens of indicators market participants use to assess publicly traded companies. A duo of the most innovative indicators are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can outperform the market by a healthy margin (see the details here).

Peter Rathjens Arrowstreet Capital 394

Peter Rathjens of Arrowstreet Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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. 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 if you have any good ideas send us an email. Keeping this in mind let’s take a look at the latest hedge fund action encompassing Fiat Chrysler Automobiles NV (NYSE:FCAU).

How have hedgies been trading Fiat Chrysler Automobiles NV (NYSE:FCAU)?

Heading into the second quarter of 2020, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. On the other hand, there were a total of 27 hedge funds with a bullish position in FCAU a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Is FCAU A Good Stock To Buy?

The largest stake in Fiat Chrysler Automobiles NV (NYSE:FCAU) was held by Arrowstreet Capital, which reported holding $170 million worth of stock at the end of September. It was followed by Two Sigma Advisors with a $71.5 million position. Other investors bullish on the company included Segantii Capital, Renaissance Technologies, and Aquamarine Capital Management. In terms of the portfolio weights assigned to each position Aquamarine Capital Management allocated the biggest weight to Fiat Chrysler Automobiles NV (NYSE:FCAU), around 8.9% of its 13F portfolio. Mohnish Pabrai is also relatively very bullish on the stock, dishing out 6.05 percent of its 13F equity portfolio to FCAU.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. LMR Partners, managed by Ben Levine, Andrew Manuel and Stefan Renold, initiated the largest position in Fiat Chrysler Automobiles NV (NYSE:FCAU). LMR Partners had $12.2 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also initiated a $1.2 million position during the quarter. The other funds with brand new FCAU positions are Mike Vranos’s Ellington, Matthew Hulsizer’s PEAK6 Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s now take a look at hedge fund activity in other stocks similar to Fiat Chrysler Automobiles NV (NYSE:FCAU). These stocks are Equifax Inc. (NYSE:EFX), Fox Corporation (NASDAQ:FOXA), Vulcan Materials Company (NYSE:VMC), and Boston Properties, Inc. (NYSE:BXP). This group of stocks’ market caps resemble FCAU’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EFX 32 1300733 0
FOXA 38 1563564 1
VMC 49 1119317 -3
BXP 29 185266 9
Average 37 1042220 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was $1042 million. That figure was $395 million in FCAU’s case. Vulcan Materials Company (NYSE:VMC) is the most popular stock in this table. On the other hand Boston Properties, Inc. (NYSE:BXP) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Fiat Chrysler Automobiles NV (NYSE:FCAU) is even less popular than BXP. Hedge funds clearly dropped the ball on FCAU 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on FCAU as the stock returned 56% in the second quarter and outperformed the market by an even larger margin.

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