Franco-Nevada Corporation (FNV): Hedge Funds Taking Some Chips Off The Table

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Franco-Nevada Corporation (NYSE:FNV) based on that data.

Is Franco-Nevada Corporation (NYSE:FNV) a cheap investment now? Money managers are in a bearish mood. The number of bullish hedge fund bets retreated by 3 recently. Our calculations also showed that FNV isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Joel Greenblatt of Gotham Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a look at the key hedge fund action encompassing Franco-Nevada Corporation (NYSE:FNV).

Hedge fund activity in Franco-Nevada Corporation (NYSE:FNV)

Heading into the second quarter of 2020, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FNV over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Franco-Nevada Corporation (NYSE:FNV) was held by Renaissance Technologies, which reported holding $488.1 million worth of stock at the end of September. It was followed by Horizon Asset Management with a $111.8 million position. Other investors bullish on the company included Sprott Asset Management, Citadel Investment Group, and D E Shaw. In terms of the portfolio weights assigned to each position Sprott Asset Management allocated the biggest weight to Franco-Nevada Corporation (NYSE:FNV), around 8.11% of its 13F portfolio. Horizon Asset Management is also relatively very bullish on the stock, dishing out 4.95 percent of its 13F equity portfolio to FNV.

Because Franco-Nevada Corporation (NYSE:FNV) has experienced falling interest from the smart money, it’s easy to see that there were a few money managers that slashed their entire stakes by the end of the first quarter. It’s worth mentioning that Ryan Caldwell’s Chiron Investment Management cut the largest position of the 750 funds followed by Insider Monkey, worth close to $22.4 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund sold off about $0.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds by the end of the first quarter.

Let’s check out hedge fund activity in other stocks similar to Franco-Nevada Corporation (NYSE:FNV). We will take a look at Welltower Inc. (NYSE:WELL), TD Ameritrade Holding Corp. (NASDAQ:AMTD), Entergy Corporation (NYSE:ETR), and McCormick & Company, Incorporated (NYSE:MKC). This group of stocks’ market valuations are similar to FNV’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
WELL 25 313164 1
AMTD 46 1250217 -4
ETR 34 1036847 3
MKC 31 280968 7
Average 34 720299 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 34 hedge funds with bullish positions and the average amount invested in these stocks was $720 million. That figure was $896 million in FNV’s case. TD Ameritrade Holding Corp. (NASDAQ:AMTD) is the most popular stock in this table. On the other hand Welltower Inc. (NYSE:WELL) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks Franco-Nevada Corporation (NYSE:FNV) is even less popular than WELL. Hedge funds clearly dropped the ball on FNV as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and still beat the market by 14.8 percentage points. A small number of hedge funds were also right about betting on FNV as the stock returned 30.8% so far in the second quarter and outperformed the market by an even larger margin.

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