Hedge Funds Are Selling FTI Consulting, Inc. (FCN)

In this article we will analyze whether FTI Consulting, Inc. (NYSE:FCN) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

FTI Consulting, Inc. (NYSE:FCN) investors should be aware of a decrease in hedge fund interest recently. FTI Consulting, Inc. (NYSE:FCN) was in 24 hedge funds’ portfolios at the end of March. The all time high for this statistic is 37. There were 25 hedge funds in our database with FCN positions at the end of the fourth quarter. Our calculations also showed that FCN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

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At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s go over the latest hedge fund action surrounding FTI Consulting, Inc. (NYSE:FCN).

Do Hedge Funds Think FCN Is A Good Stock To Buy Now?

Heading into the second quarter of 2021, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from the fourth quarter of 2020. On the other hand, there were a total of 19 hedge funds with a bullish position in FCN a year ago. 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 FTI Consulting, Inc. (NYSE:FCN) was held by Orbis Investment Management, which reported holding $133.7 million worth of stock at the end of December. It was followed by Greenvale Capital with a $106.5 million position. Other investors bullish on the company included Nitorum Capital, Two Sigma Advisors, and D E Shaw. In terms of the portfolio weights assigned to each position Greenvale Capital allocated the biggest weight to FTI Consulting, Inc. (NYSE:FCN), around 11.59% of its 13F portfolio. Bayberry Capital Partners is also relatively very bullish on the stock, dishing out 7.45 percent of its 13F equity portfolio to FCN.

Since FTI Consulting, Inc. (NYSE:FCN) has experienced bearish sentiment from the entirety of the hedge funds we track, logic holds that there was a specific group of funds that elected to cut their positions entirely last quarter. It’s worth mentioning that Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital dropped the largest investment of all the hedgies monitored by Insider Monkey, worth about $8.9 million in stock. Vikas Lunia’s fund, Lunia Capital, also dumped its stock, about $5.4 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to FTI Consulting, Inc. (NYSE:FCN). These stocks are Stantec Inc. (NYSE:STN), Fisker Inc. (NYSE:FSR), Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI), Marathon Digital Holdings, Inc. (NASDAQ:MARA), BlackBerry Limited (NYSE:BB), Synaptics Incorporated (NASDAQ:SYNA), and Shake Shack Inc (NYSE:SHAK). This group of stocks’ market caps are similar to FCN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
STN 9 39824 2
FSR 22 337954 4
SHI 4 14885 -1
MARA 10 197814 2
BB 24 499771 -7
SYNA 25 533817 -3
SHAK 23 560136 -2
Average 16.7 312029 -0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.7 hedge funds with bullish positions and the average amount invested in these stocks was $312 million. That figure was $520 million in FCN’s case. Synaptics Incorporated (NASDAQ:SYNA) is the most popular stock in this table. On the other hand Sinopec Shanghai Petrochemical Company Limited (NYSE:SHI) is the least popular one with only 4 bullish hedge fund positions. FTI Consulting, Inc. (NYSE:FCN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FCN is 71.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately FCN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FCN were disappointed as the stock returned -3.9% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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