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Hedge Funds Aren’t Done Selling Franks International NV (FI)

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 at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Franks International NV (NYSE:FI).

Is Franks International NV (NYSE:FI) a buy, sell, or hold? The smart money is in a bearish mood. The number of long hedge fund bets went down by 3 in recent months. Our calculations also showed that FI 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). FI was in 7 hedge funds’ portfolios at the end of the first quarter of 2020. There were 10 hedge funds in our database with FI holdings at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are tons of formulas market participants have at their disposal to assess publicly traded companies. A couple of the most underrated formulas are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can outperform their index-focused peers by a very impressive margin (see the details here).

GOTHAM ASSET MANAGEMENT

Joel Greenblatt of Gotham Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a peek at the recent hedge fund action encompassing Franks International NV (NYSE:FI).

How have hedgies been trading Franks International NV (NYSE:FI)?

At Q1’s end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -30% from one quarter earlier. By comparison, 12 hedge funds held shares or bullish call options in FI a year ago. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Among these funds, Adage Capital Management held the most valuable stake in Franks International NV (NYSE:FI), which was worth $2.3 million at the end of the third quarter. On the second spot was D E Shaw which amassed $1.9 million worth of shares. Marshall Wace LLP, Citadel Investment Group, and Two Sigma Advisors 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 Adage Capital Management allocated the biggest weight to Franks International NV (NYSE:FI), around 0.01% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to FI.

Seeing as Franks International NV (NYSE:FI) has experienced falling interest from the smart money, we can see that there exists a select few money managers that slashed their entire stakes by the end of the first quarter. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dumped the largest stake of all the hedgies followed by Insider Monkey, worth an estimated $7.1 million in stock. Israel Englander’s fund, Millennium Management, also sold off its stock, about $4.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 3 funds by the end of the first quarter.

Let’s now review hedge fund activity in other stocks similar to Franks International NV (NYSE:FI). These stocks are New York Mortgage Trust, Inc. (NASDAQ:NYMT), Hanger, Inc. (NYSE:HNGR), Cerence Inc. (NASDAQ:CRNC), and Quotient Technology Inc (NYSE:QUOT). 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
NYMT 13 15134 -2
HNGR 15 50523 0
CRNC 11 66375 -11
QUOT 18 242478 3
Average 14.25 93628 -2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $94 million. That figure was $5 million in FI’s case. Quotient Technology Inc (NYSE:QUOT) is the most popular stock in this table. On the other hand Cerence Inc. (NASDAQ:CRNC) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Franks International NV (NYSE:FI) is even less popular than CRNC. Hedge funds dodged a bullet by taking a bearish stance towards FI. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. Unfortunately FI wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); FI investors were disappointed as the stock returned 9.3% during the second quarter (through June 10th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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