Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Formula One Group (NASDAQ:FWONA).
Formula One Group (NASDAQ:FWONA) investors should pay attention to an increase in support from the world’s most elite money managers lately. FWONA was in 19 hedge funds’ portfolios at the end of the third quarter of 2019. There were 18 hedge funds in our database with FWONA holdings at the end of the previous quarter. Our calculations also showed that FWONA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Mason Hawkins of Southeastern Asset Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s take a gander at the key hedge fund action regarding Formula One Group (NASDAQ:FWONA).
How are hedge funds trading Formula One Group (NASDAQ:FWONA)?
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the second quarter of 2019. By comparison, 21 hedge funds held shares or bullish call options in FWONA a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Formula One Group (NASDAQ:FWONA) was held by Teton Capital, which reported holding $102.7 million worth of stock at the end of September. It was followed by Southeastern Asset Management with a $92.8 million position. Other investors bullish on the company included Ashe Capital, Polar Capital, and CQS Cayman LP. In terms of the portfolio weights assigned to each position Teton Capital allocated the biggest weight to Formula One Group (NASDAQ:FWONA), around 17.02% of its 13F portfolio. Kontiki Capital is also relatively very bullish on the stock, designating 6.8 percent of its 13F equity portfolio to FWONA.
Consequently, key money managers have jumped into Formula One Group (NASDAQ:FWONA) headfirst. Polar Capital, managed by Brian Ashford-Russell and Tim Woolley, established the biggest position in Formula One Group (NASDAQ:FWONA). Polar Capital had $4.4 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also made a $2 million investment in the stock during the quarter. The only other fund with a brand new FWONA position is Michael Gelband’s ExodusPoint Capital.
Let’s also examine hedge fund activity in other stocks similar to Formula One Group (NASDAQ:FWONA). We will take a look at DaVita Inc (NYSE:DVA), Vail Resorts, Inc. (NYSE:MTN), Black Knight, Inc. (NYSE:BKI), and Omega Healthcare Investors Inc (NYSE:OHI). This group of stocks’ market valuations match FWONA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DVA | 34 | 3079581 | -2 |
| MTN | 35 | 478623 | 2 |
| BKI | 42 | 883381 | -3 |
| OHI | 18 | 176390 | 1 |
| Average | 32.25 | 1154494 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.25 hedge funds with bullish positions and the average amount invested in these stocks was $1154 million. That figure was $372 million in FWONA’s case. Black Knight, Inc. (NYSE:BKI) is the most popular stock in this table. On the other hand Omega Healthcare Investors Inc (NYSE:OHI) is the least popular one with only 18 bullish hedge fund positions. Formula One Group (NASDAQ:FWONA) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on FWONA, though not to the same extent, as the stock returned 8.8% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
