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FTI Consulting, Inc. (FCN): Are Hedge Funds Right About This Stock?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider FTI Consulting, Inc. (NYSE:FCN) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

FTI Consulting, Inc. (NYSE:FCN) has experienced an increase in enthusiasm from smart money of late. Our calculations also showed that FCN isn’t among the 30 most popular stocks among hedge funds.

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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

Let’s take a look at the latest hedge fund action regarding FTI Consulting, Inc. (NYSE:FCN).

What does the smart money think about FTI Consulting, Inc. (NYSE:FCN)?

Heading into the fourth quarter of 2018, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in FCN heading into this year. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

FCN_dec2018

Of the funds tracked by Insider Monkey, Noam Gottesman’s GLG Partners has the biggest position in FTI Consulting, Inc. (NYSE:FCN), worth close to $38.3 million, amounting to 0.1% of its total 13F portfolio. On GLG Partners’s heels is Renaissance Technologies, led by Jim Simons, holding a $22.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish encompass Israel Englander’s Millennium Management, Martin Whitman’s Third Avenue Management and John Overdeck and David Siegel’s Two Sigma Advisors.

Consequently, key hedge funds have been driving this bullishness. Millennium Management, managed by Israel Englander, established the most outsized position in FTI Consulting, Inc. (NYSE:FCN). Millennium Management had $10.4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $2.8 million investment in the stock during the quarter. The following funds were also among the new FCN investors: Matthew Hulsizer’s PEAK6 Capital Management, D. E. Shaw’s D E Shaw, and Alec Litowitz and Ross Laser’s Magnetar Capital.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as FTI Consulting, Inc. (NYSE:FCN) but similarly valued. These stocks are InterDigital, Inc. (NASDAQ:IDCC), Mercury General Corporation (NYSE:MCY), Outfront Media Inc (NYSE:OUT), and The Michaels Companies, Inc. (NASDAQ:MIK). This group of stocks’ market valuations match FCN’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IDCC 18 174990 3
MCY 18 140557 9
OUT 13 136660 -3
MIK 26 212111 -2
Average 18.75 166080 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $166 million. That figure was $109 million in FCN’s case. The Michaels Companies, Inc. (NASDAQ:MIK) is the most popular stock in this table. On the other hand Outfront Media Inc (NYSE:OUT) is the least popular one with only 13 bullish hedge fund positions. FTI Consulting, Inc. (NYSE:FCN) 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 MIK might be a better candidate to consider a long position.

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

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