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Do Hedge Funds Love Four Corners Property Trust, Inc. (FCPT)?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Four Corners Property Trust, Inc. (NYSE:FCPT).

Is Four Corners Property Trust, Inc. (NYSE:FCPT) a bargain? Hedge funds are getting less optimistic. The number of bullish hedge fund positions dropped by 1 lately. Our calculations also showed that FCPT isn’t among the 30 most popular stocks among hedge funds. FCPT was in 13 hedge funds’ portfolios at the end of September. There were 14 hedge funds in our database with FCPT holdings at the end of the previous quarter.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 18 percentage points since May 2014 through December 3, 2018 (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.

Clint Carlson, Carlson Capital

We’re going to take a look at the recent hedge fund action surrounding Four Corners Property Trust, Inc. (NYSE:FCPT).

How have hedgies been trading Four Corners Property Trust, Inc. (NYSE:FCPT)?

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in FCPT heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

FCPT_dec2018

Among these funds, Millennium Management held the most valuable stake in Four Corners Property Trust, Inc. (NYSE:FCPT), which was worth $35.3 million at the end of the third quarter. On the second spot was Balyasny Asset Management which amassed $30.2 million worth of shares. Moreover, Renaissance Technologies, Carlson Capital, and AQR Capital Management were also bullish on Four Corners Property Trust, Inc. (NYSE:FCPT), allocating a large percentage of their portfolios to this stock.

Judging by the fact that Four Corners Property Trust, Inc. (NYSE:FCPT) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there were a few hedgies who sold off their full holdings heading into Q3. It’s worth mentioning that Greg Poole’s Echo Street Capital Management said goodbye to the largest position of the 700 funds followed by Insider Monkey, valued at close to $1.9 million in stock, and David Costen Haley’s HBK Investments was right behind this move, as the fund dropped about $1.3 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds heading into Q3.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Four Corners Property Trust, Inc. (NYSE:FCPT) but similarly valued. These stocks are Heartland Express, Inc. (NASDAQ:HTLD), Imperva Inc (NASDAQ:IMPV), LivePerson, Inc. (NASDAQ:LPSN), and Meritage Homes Corp (NYSE:MTH). All of these stocks’ market caps resemble FCPT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HTLD 11 19849 -1
IMPV 29 479072 -1
LPSN 12 128677 -5
MTH 13 223910 -3
Average 16.25 212877 -2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $213 million. That figure was $138 million in FCPT’s case. Imperva Inc (NASDAQ:IMPV) is the most popular stock in this table. On the other hand Heartland Express, Inc. (NASDAQ:HTLD) is the least popular one with only 11 bullish hedge fund positions. Four Corners Property Trust, Inc. (NYSE:FCPT) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard IMPV might be a better candidate to consider a long position.

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

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