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Hedge Funds Dipping Their Toes Back Into TechnipFMC plc (FTI)?

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 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Stocks kept going up since then. In this article we look at how hedge funds traded TechnipFMC plc (NYSE:FTI) and determine whether the smart money was really smart about this stock.

TechnipFMC plc (NYSE:FTI) was in 31 hedge funds’ portfolios at the end of June. The all time high for this statistics is 42. FTI shareholders have witnessed an increase in hedge fund sentiment of late. There were 29 hedge funds in our database with FTI positions at the end of the first quarter. Our calculations also showed that FTI isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

According to most shareholders, hedge funds are perceived as slow, outdated financial tools of the past. While there are more than 8000 funds with their doors open at present, Our researchers choose to focus on the elite of this group, about 850 funds. These hedge fund managers administer the majority of the smart money’s total capital, and by tracking their top investments, Insider Monkey has unsheathed a few investment strategies that have historically outperformed 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 annually since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Kerr Neilson of Platinum Asset Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we’re going to take a gander at the recent hedge fund action regarding TechnipFMC plc (NYSE:FTI).

What have hedge funds been doing with TechnipFMC plc (NYSE:FTI)?

At second quarter’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FTI over the last 20 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

More specifically, Pzena Investment Management was the largest shareholder of TechnipFMC plc (NYSE:FTI), with a stake worth $125.7 million reported as of the end of September. Trailing Pzena Investment Management was Platinum Asset Management, which amassed a stake valued at $65.5 million. Antipodes Partners, Citadel Investment Group, and D E Shaw 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 Antipodes Partners allocated the biggest weight to TechnipFMC plc (NYSE:FTI), around 2.82% of its 13F portfolio. SIR Capital Management is also relatively very bullish on the stock, dishing out 1.59 percent of its 13F equity portfolio to FTI.

Now, specific money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, created the most valuable position in TechnipFMC plc (NYSE:FTI). Balyasny Asset Management had $10 million invested in the company at the end of the quarter. Todd J. Kantor’s Encompass Capital Advisors also initiated a $4.1 million position during the quarter. The other funds with brand new FTI positions are Phill Gross and Robert Atchinson’s Adage Capital Management, Lee Ainslie’s Maverick Capital, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s now take a look at hedge fund activity in other stocks similar to TechnipFMC plc (NYSE:FTI). We will take a look at PNM Resources, Inc. (NYSE:PNM), Ardagh Group S.A. (NYSE:ARD), Axsome Therapeutics, Inc. (NASDAQ:AXSM), Intercorp Financial Services Inc. (NYSE:IFS), SmileDirectClub, Inc. (NASDAQ:SDC), EQT Corporation (NYSE:EQT), and Bank OZK (NASDAQ:OZK). This group of stocks’ market caps match FTI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PNM 25 359323 3
ARD 7 53702 -1
AXSM 31 552366 7
IFS 2 29824 0
SDC 20 66745 0
EQT 34 374313 4
OZK 17 160531 -8
Average 19.4 228115 0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $228 million. That figure was $529 million in FTI’s case. EQT Corporation (NYSE:EQT) is the most popular stock in this table. On the other hand Intercorp Financial Services Inc. (NYSE:IFS) is the least popular one with only 2 bullish hedge fund positions. TechnipFMC plc (NYSE:FTI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FTI is 74.5. 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 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 23.8% in 2020 through September 14th and beat the market by 17.6 percentage points. Unfortunately FTI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FTI were disappointed as the stock returned -1.3% during the same time period 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 many of these stocks already outperformed the market so far this year.

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