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Hedge Funds Have Never Been Less Bullish On FedEx Corporation (FDX)

Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by 4 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of FedEx Corporation (NYSE:FDX).

Is FedEx Corporation (NYSE:FDX) a buy here? The smart money is becoming less hopeful. The number of long hedge fund positions were cut by 1 in recent months. Our calculations also showed that FDX isn’t among the 30 most popular stocks among hedge funds (see the video below). FDX was in 40 hedge funds’ portfolios at the end of June. There were 41 hedge funds in our database with FDX positions at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

01 Mason Hawkins, Southeastern Asset Management

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a glance at the key hedge fund action regarding FedEx Corporation (NYSE:FDX).

How are hedge funds trading FedEx Corporation (NYSE:FDX)?

At the end of the second quarter, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from the first quarter of 2019. The graph below displays the number of hedge funds with bullish position in FDX over the last 16 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with FDX Positions

The largest stake in FedEx Corporation (NYSE:FDX) was held by Bill & Melinda Gates Foundation Trust, which reported holding $496.7 million worth of stock at the end of March. It was followed by Greenhaven Associates with a $447.9 million position. Other investors bullish on the company included Southeastern Asset Management, Citadel Investment Group, and Scopus Asset Management.

Because FedEx Corporation (NYSE:FDX) has experienced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of fund managers who were dropping their entire stakes last quarter. Intriguingly, Alexander Mitchell’s Scopus Asset Management dropped the biggest investment of the “upper crust” of funds followed by Insider Monkey, worth an estimated $30.8 million in call options. Chris Rokos’s fund, Rokos Capital Management, also cut its call options, about $10.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to FedEx Corporation (NYSE:FDX). These stocks are BCE Inc. (NYSE:BCE), Orange S.A. (NYSE:ORAN), L3Harris Technologies, Inc. (NYSE:LHX), and Prudential Financial Inc (NYSE:PRU). This group of stocks’ market caps are similar to FDX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BCE 14 364792 -2
ORAN 2 1488 0
LHX 30 770043 5
PRU 33 512084 2
Average 19.75 412102 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $412 million. That figure was $1809 million in FDX’s case. Prudential Financial Inc (NYSE:PRU) is the most popular stock in this table. On the other hand Orange S.A. (NYSE:ORAN) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks FedEx Corporation (NYSE:FDX) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately FDX wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on FDX were disappointed as the stock returned -11% during the third quarter 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 many of these stocks already outperformed the market in Q3.

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

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