Is Fluor Corporation (NEW) (NYSE:FLR) the right pick for your portfolio? Money managers are becoming less hopeful. The number of long hedge fund positions were cut by 8 in recent months.
In the eyes of most stock holders, hedge funds are assumed to be slow, outdated financial vehicles of yesteryear. While there are over 8000 funds in operation at present, we look at the crème de la crème of this group, around 450 funds. It is estimated that this group oversees the majority of the smart money’s total capital, and by monitoring their best equity investments, we have deciphered a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Just as important, positive insider trading sentiment is another way to break down the world of equities. As the old adage goes: there are plenty of reasons for an executive to drop shares of his or her company, but just one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the market-beating potential of this method if “monkeys” understand where to look (learn more here).
Keeping this in mind, let’s take a look at the recent action encompassing Fluor Corporation (NEW) (NYSE:FLR).
How have hedgies been trading Fluor Corporation (NEW) (NYSE:FLR)?
In preparation for this year, a total of 24 of the hedge funds we track were long in this stock, a change of -25% from one quarter earlier. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings substantially.
When looking at the hedgies we track, Daniel Bubis’s Tetrem Capital Management had the most valuable position in Fluor Corporation (NEW) (NYSE:FLR), worth close to $41 million, accounting for 1.2% of its total 13F portfolio. Coming in second is Alan Fournier of Pennant Capital Management, with a $30 million position; 1.2% of its 13F portfolio is allocated to the company. Other hedgies with similar optimism include Bruce Kovner’s Caxton Associates LP, Joe DiMenna’s ZWEIG DIMENNA PARTNERS and Phill Gross and Robert Atchinson’s Adage Capital Management.
Due to the fact that Fluor Corporation (NEW) (NYSE:FLR) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there exists a select few money managers that decided to sell off their positions entirely at the end of the year. Intriguingly, Ric Dillon’s Diamond Hill Capital sold off the largest investment of the “upper crust” of funds we track, comprising close to $71 million in stock., and Bruce Kovner of Caxton Associates LP was right behind this move, as the fund dropped about $34 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 8 funds at the end of the year.
What do corporate executives and insiders think about Fluor Corporation (NEW) (NYSE:FLR)?
Insider purchases made by high-level executives is best served when the company we’re looking at has experienced transactions within the past half-year. Over the latest 180-day time period, Fluor Corporation (NEW) (NYSE:FLR) has seen zero unique insiders buying, and 3 insider sales (see the details of insider trades here).
With the returns demonstrated by our studies, everyday investors should always keep an eye on hedge fund and insider trading sentiment, and Fluor Corporation (NEW) (NYSE:FLR) applies perfectly to this mantra.
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