We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Frontier Communications Parent Inc. (NASDAQ:FYBR) and determine whether hedge funds skillfully traded this stock.
Is Frontier Communications Parent Inc. (NASDAQ:FYBR) the right pick for your portfolio? The best stock pickers were in a bullish mood. The number of bullish hedge fund bets increased by 43 recently. Frontier Communications Parent Inc. (NASDAQ:FYBR) was in 43 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that FYBR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Stephen Feinberg of Cerberus Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind let’s analyze the key hedge fund action encompassing Frontier Communications Parent Inc. (NASDAQ:FYBR).
Do Hedge Funds Think FYBR Is A Good Stock To Buy Now?
At the end of September, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 43 from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FYBR over the last 25 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Matthew Barrett’s Glendon Capital Management has the largest position in Frontier Communications Parent Inc. (NASDAQ:FYBR), worth close to $582.4 million, comprising 34.6% of its total 13F portfolio. Coming in second is Cerberus Capital Management, managed by Stephen Feinberg, which holds a $575.7 million position; 9.7% of its 13F portfolio is allocated to the stock. Other peers that are bullish encompass Edward A. Mule’s Silver Point Capital, Michael A. Price and Amos Meron’s Empyrean Capital Partners and Carl Goldsmith and Scott Klein’s Beach Point Capital Management. In terms of the portfolio weights assigned to each position Marathon Asset Management allocated the biggest weight to Frontier Communications Parent Inc. (NASDAQ:FYBR), around 78.65% of its 13F portfolio. Beach Point Capital Management is also relatively very bullish on the stock, designating 35.06 percent of its 13F equity portfolio to FYBR.
Consequently, key hedge funds were leading the bulls’ herd. Mudrick Capital Management, managed by Jason Mudrick, assembled the biggest position in Frontier Communications Parent Inc. (NASDAQ:FYBR). Mudrick Capital Management had $35.1 million invested in the company at the end of the quarter. Mark G. Schoeppner’s Quaker Capital Investments also initiated a $9.6 million position during the quarter. The following funds were also among the new FYBR investors: Zach Schreiber’s Point State Capital, Robert Henry Lynch’s Aristeia Capital, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Frontier Communications Parent Inc. (NASDAQ:FYBR) but similarly valued. These stocks are Ritchie Bros. Auctioneers (NYSE:RBA), Thor Industries, Inc. (NYSE:THO), Medpace Holdings, Inc. (NASDAQ:MEDP), Kinross Gold Corporation (NYSE:KGC), TopBuild Corp (NYSE:BLD), Envista Holdings Corporation (NYSE:NVST), and American Campus Communities, Inc. (NYSE:ACC). This group of stocks’ market caps are closest to FYBR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RBA | 13 | 277550 | -9 |
| THO | 29 | 174266 | 3 |
| MEDP | 23 | 424211 | -1 |
| KGC | 27 | 321000 | -1 |
| BLD | 17 | 93609 | -5 |
| NVST | 33 | 1073278 | -5 |
| ACC | 17 | 147769 | -4 |
| Average | 22.7 | 358812 | -3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.7 hedge funds with bullish positions and the average amount invested in these stocks was $359 million. That figure was $3539 million in FYBR’s case. Envista Holdings Corporation (NYSE:NVST) is the most popular stock in this table. On the other hand Ritchie Bros. Auctioneers (NYSE:RBA) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Frontier Communications Parent Inc. (NASDAQ:FYBR) is more popular among hedge funds. Our overall hedge fund sentiment score for FYBR is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still beat the market by 3.6 percentage points. Unfortunately, FYBR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FYBR were disappointed as the stock returned -4.3% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
Follow Frontier Communications Parent Inc. (NASDAQ:FYBR)
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Disclosure: None. This article was originally published at Insider Monkey.
