It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. Since stock returns aren’t usually symmetrically distributed and index returns are more affected by a few outlier stocks (i.e. the FAANG stocks dominating and driving S&P 500 Index’s returns in recent years), more than 50% of the constituents of the Standard and Poor’s 500 Index underperform the benchmark. Hence, if you randomly pick a stock, there is more than 50% chance that you’d fail to beat the market. At the same time, the 15 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey generated a return of 19.7% during the first 2.5 months of 2019 (vs. 13.1% gain for SPY), with 93% of these stocks outperforming the benchmark. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Comfort Systems USA, Inc. (NYSE:FIX).
Is Comfort Systems USA, Inc. (NYSE:FIX) a great investment now? The smart money is becoming more confident. The number of long hedge fund positions increased by 2 lately. Our calculations also showed that fix isn’t among the 30 most popular stocks among hedge funds. FIX was in 24 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 22 hedge funds in our database with FIX positions at the end of the previous quarter.
If you’d ask most investors, hedge funds are seen as unimportant, outdated investment tools of the past. While there are greater than 8000 funds with their doors open at present, Our experts choose to focus on the moguls of this group, about 750 funds. It is estimated that this group of investors shepherd most of the smart money’s total capital, and by monitoring their matchless investments, Insider Monkey has unearthed a few investment strategies that have historically beaten Mr. Market. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by nearly 5 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
Let’s take a look at the latest hedge fund action surrounding Comfort Systems USA, Inc. (NYSE:FIX).
How have hedgies been trading Comfort Systems USA, Inc. (NYSE:FIX)?
Heading into the first quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FIX over the last 14 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the largest position in Comfort Systems USA, Inc. (NYSE:FIX). Renaissance Technologies has a $27 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Daruma Asset Management, managed by Mariko Gordon, which holds a $26.1 million position; the fund has 3.5% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism include Israel Englander’s Millennium Management, Ian Simm’s Impax Asset Management and Chuck Royce’s Royce & Associates.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the biggest position in Comfort Systems USA, Inc. (NYSE:FIX). Marshall Wace LLP had $4.4 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also initiated a $1.7 million position during the quarter. The other funds with brand new FIX positions are Matthew Hulsizer’s PEAK6 Capital Management and Hoon Kim’s Quantinno Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Comfort Systems USA, Inc. (NYSE:FIX) but similarly valued. We will take a look at Altra Industrial Motion Corp. (NASDAQ:AIMC), Allegiant Travel Company (NASDAQ:ALGT), Diodes Incorporated (NASDAQ:DIOD), and Cooper Tire & Rubber Company (NYSE:CTB). This group of stocks’ market caps are similar to FIX’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $202 million. That figure was $177 million in FIX’s case. Altra Industrial Motion Corp. (NASDAQ:AIMC) is the most popular stock in this table. On the other hand Diodes Incorporated (NASDAQ:DIOD) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Comfort Systems USA, Inc. (NYSE:FIX) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on FIX as the stock returned 30.6% and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.