Hedge Funds Are Dumping Franks International NV (FI)

The equity market returns were very disappointing in the third quarter, “thanks” to the slowdown of China’s economy and the weaker-than-expected U.S. economic data. It was not entirely clear whether the broader market sell-off made U.S. equity valuations undervalued, but it definitely made them more attractive. It is worth mentioning that Russell 2000 ETF (IWM) underperformed the S&P 500 ETF by more than 14 percentage points during the period of June 25th through October 30th, which clearly points to the fact that most investors, including hedge fund firms and institutional investors, heavily cut their exposure to high-potential (but seemingly riskier) small-cap stocks during the bloody third quarter. So let’s take a glance at the smart money sentiment towards Franks International NV (NYSE:FI) and see how it was affected.

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Franks International NV (NYSE:FI) investors should pay attention to a decrease in enthusiasm from smart money lately.

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Today there are many metrics shareholders have at their disposal to grade their stock investments. A duo of the most underrated metrics are hedge fund and insider trading signals. Experts at hedge fund tracking site Insider Monkey have shown that, historically, those who follow the top picks of the top money managers can outpace their index-focused peers by a very impressive amount (see the details here).

Now, we’re going to go over the key action regarding Franks International NV (NYSE:FI).

What have hedge funds been doing with Franks International NV (NYSE:FI)?

At the end of Q3, a total of 12 of the hedge funds tracked by Insider Monkey were long in this stock, a change of -29% from one quarter earlier. However, with the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes significantly.

According to hedge fund intelligence website Insider Monkey, Legg Mason Capital Management, managed by Bill Miller, holds the most valuable position in Franks International NV (NYSE:FI). Legg Mason Capital Management has a $8.6 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is D E Shaw, with a $6.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds that hold long positions consist of Phill Gross and Robert Atchinson’s Adage Capital Management, Chuck Royce’s Royce & Associates and Ken Griffin’s Citadel Investment Group.

Since Franks International NV (NYSE:FI) has faced falling interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few money managers that slashed their positions entirely in the third quarter. Interestingly, Robert Joseph Caruso’s Select Equity Group dropped the biggest stake of all the hedgies tracked by Insider Monkey, valued at close to $13.4 million. Joel Greenblatt’s fund, Gotham Asset Management, also dumped its stock, about $4.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by five funds in the third quarter.

Let’s also examine hedge fund activity in other stocks similar to Franks International NV (NYSE:FI). We will take a look at NuVasive, Inc. (NASDAQ:NUVA), Harbinger Group Inc (NYSE:HRG), Laclede Group Inc (NYSE:LG), and Cantel Medical Corp. (NYSE:CMN). This group of stocks’ market values are closest to FI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NUVA 37 622078 1
HRG 26 1667547 0
LG 8 84602 -1
CMN 6 133874 0

Franks International NV (NYSE:FI) has registered a larger decline than other companies from the table above. Moreover, the sentiment is weaker as compared to some of its peers, which may be a red flag regarding the stock’s trajectory going forward.