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Hedge Funds Are Dumping FutureFuel Corp. (FF)

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was FutureFuel Corp. (NYSE:FF).

FutureFuel Corp. (NYSE:FF) investors should pay attention to a decrease in hedge fund interest in recent months. FF was in 10 hedge funds’ portfolios at the end of the third quarter of 2019. There were 11 hedge funds in our database with FF holdings at the end of the previous quarter. Our calculations also showed that FF isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To most traders, hedge funds are seen as unimportant, outdated financial vehicles of the past. While there are over 8000 funds trading at the moment, We choose to focus on the leaders of this group, around 750 funds. These hedge fund managers administer the lion’s share of all hedge funds’ total asset base, and by tailing their top investments, Insider Monkey has uncovered many investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

RENAISSANCE TECHNOLOGIES

Jim Simons of Renaissance Technologies

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a gander at the new hedge fund action regarding FutureFuel Corp. (NYSE:FF).

What does smart money think about FutureFuel Corp. (NYSE:FF)?

At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the previous quarter. By comparison, 11 hedge funds held shares or bullish call options in FF a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is FF A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Renaissance Technologies has the most valuable position in FutureFuel Corp. (NYSE:FF), worth close to $27.3 million, comprising less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Chuck Royce of Royce & Associates, with a $9.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Cliff Asness’s AQR Capital Management and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Royce & Associates allocated the biggest weight to FutureFuel Corp. (NYSE:FF), around 0.09% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to FF.

Due to the fact that FutureFuel Corp. (NYSE:FF) has witnessed falling interest from hedge fund managers, it’s easy to see that there exists a select few fund managers who were dropping their full holdings last quarter. Intriguingly, Donald Sussman’s Paloma Partners dumped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, comprising about $0.2 million in stock. Ken Griffin’s fund, Citadel Investment Group, also sold off its stock, about $0.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as FutureFuel Corp. (NYSE:FF) but similarly valued. We will take a look at Ituran Location and Control Ltd. (US) (NASDAQ:ITRN), International Money Express, Inc. (NASDAQ:IMXI), Heidrick & Struggles International, Inc. (NASDAQ:HSII), and Flexion Therapeutics Inc (NASDAQ:FLXN). All of these stocks’ market caps match FF’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ITRN 11 95048 -2
IMXI 14 96639 2
HSII 14 97655 1
FLXN 15 137510 0
Average 13.5 106713 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $107 million. That figure was $45 million in FF’s case. Flexion Therapeutics Inc (NASDAQ:FLXN) is the most popular stock in this table. On the other hand Ituran Location and Control Ltd. (US) (NASDAQ:ITRN) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks FutureFuel Corp. (NYSE:FF) is even less popular than ITRN. Hedge funds dodged a bullet by taking a bearish stance towards FF. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately FF wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); FF investors were disappointed as the stock returned -5.5% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.

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

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