Hedge Funds Are Warming Up To INTL Fcstone Inc (INTL)

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 INTL Fcstone Inc (NASDAQ:INTL) based on that data and determine whether they were really smart about the stock.

Is INTL Fcstone Inc (NASDAQ:INTL) the right investment to pursue these days? Prominent investors were becoming hopeful. The number of long hedge fund bets went up by 1 lately. Our calculations also showed that INTL 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.

To most market participants, hedge funds are assumed to be underperforming, outdated investment vehicles of yesteryear. While there are more than 8000 funds in operation today, Our experts choose to focus on the moguls of this club, around 850 funds. These investment experts control most of all hedge funds’ total asset base, and by tailing their matchless stock picks, Insider Monkey has deciphered many investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

David Harding

David Harding of Winton Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to view the latest hedge fund action encompassing INTL Fcstone Inc (NASDAQ:INTL).

How have hedgies been trading INTL Fcstone Inc (NASDAQ:INTL)?

At the end of the first quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 11% from the previous quarter. The graph below displays the number of hedge funds with bullish position in INTL over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is INTL A Good Stock To Buy?

More specifically, Nine Ten Partners was the largest shareholder of INTL Fcstone Inc (NASDAQ:INTL), with a stake worth $32.9 million reported as of the end of September. Trailing Nine Ten Partners was Private Capital Management, which amassed a stake valued at $22.7 million. Cove Street Capital, Royce & Associates, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Nine Ten Partners allocated the biggest weight to INTL Fcstone Inc (NASDAQ:INTL), around 13.12% of its 13F portfolio. Private Capital Management is also relatively very bullish on the stock, setting aside 7.12 percent of its 13F equity portfolio to INTL.

With a general bullishness amongst the heavyweights, key hedge funds have jumped into INTL Fcstone Inc (NASDAQ:INTL) headfirst. Winton Capital Management, managed by David Harding, created the most outsized position in INTL Fcstone Inc (NASDAQ:INTL). Winton Capital Management had $0.4 million invested in the company at the end of the quarter.

Let’s go over hedge fund activity in other stocks similar to INTL Fcstone Inc (NASDAQ:INTL). We will take a look at BRP Inc. (NASDAQ:DOOO), Trinseo S.A. (NYSE:TSE), Delphi Technologies PLC (NYSE:DLPH), and Sculptor Capital Management, Inc. (NYSE:SCU). This group of stocks’ market caps are closest to INTL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
DOOO 10 52931 1
TSE 17 26358 -1
DLPH 19 105634 2
SCU 12 72077 0
Average 14.5 64250 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $84 million in INTL’s case. Delphi Technologies PLC (NYSE:DLPH) is the most popular stock in this table. On the other hand BRP Inc. (NASDAQ:DOOO) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks INTL Fcstone Inc (NASDAQ:INTL) is even less popular than DOOO. Hedge funds clearly dropped the ball on INTL 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 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on INTL as the stock returned 51.7% 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.