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Fluor Corporation (FLR): Hedge Funds Were Caught Flat-Footed

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 835 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Fluor Corporation (NYSE:FLR), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Fluor Corporation (NYSE:FLR) has experienced an increase in activity from the world’s largest hedge funds in recent months. FLR was in 24 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 20 hedge funds in our database with FLR holdings at the end of the previous quarter. Our calculations also showed that FLR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

In the 21st century investor’s toolkit there are numerous formulas market participants put to use to assess publicly traded companies. A couple of the best formulas are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the top money managers can trounce the market by a solid margin (see the details here).

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to view the latest hedge fund action regarding Fluor Corporation (NYSE:FLR).

What does smart money think about Fluor Corporation (NYSE:FLR)?

Heading into the first quarter of 2020, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FLR over the last 18 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.

Is FLR A Good Stock To Buy?

Among these funds, D E Shaw held the most valuable stake in Fluor Corporation (NYSE:FLR), which was worth $75 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $51 million worth of shares. Millennium Management, Ariel Investments, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Clearline Capital allocated the biggest weight to Fluor Corporation (NYSE:FLR), around 3.63% of its 13F portfolio. One Fin Capital Management is also relatively very bullish on the stock, designating 3.5 percent of its 13F equity portfolio to FLR.

As one would reasonably expect, key hedge funds have jumped into Fluor Corporation (NYSE:FLR) headfirst. Lodge Hill Capital, managed by Clint Murray, established the largest position in Fluor Corporation (NYSE:FLR). Lodge Hill Capital had $9.6 million invested in the company at the end of the quarter. Marc Majzner’s Clearline Capital also made a $8.5 million investment in the stock during the quarter. The following funds were also among the new FLR investors: David MacKnight’s One Fin Capital Management, Joseph Sirdevan’s Galibier Capital Management, and Minhua Zhang’s Weld Capital Management.

Let’s check out hedge fund activity in other stocks similar to Fluor Corporation (NYSE:FLR). We will take a look at Commercial Metals Company (NYSE:CMC), Pattern Energy Group Inc (NASDAQ:PEGI), Everbridge, Inc. (NASDAQ:EVBG), and New Fortress Energy LLC (NASDAQ:NFE). All of these stocks’ market caps resemble FLR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CMC 27 265495 7
PEGI 22 103268 8
EVBG 37 565362 5
NFE 1 26125 -3
Average 21.75 240063 4.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $240 million. That figure was $275 million in FLR’s case. Everbridge, Inc. (NASDAQ:EVBG) is the most popular stock in this table. On the other hand New Fortress Energy LLC (NASDAQ:NFE) is the least popular one with only 1 bullish hedge fund positions. Fluor Corporation (NYSE:FLR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately FLR wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on FLR were disappointed as the stock returned -66.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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