With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was Focus Financial Partners Inc. (NASDAQ:FOCS).
Focus Financial Partners Inc. (NASDAQ:FOCS) has experienced an increase in hedge fund interest in recent months. Focus Financial Partners Inc. (NASDAQ:FOCS) was in 23 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 12. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FOCS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to check out the latest hedge fund action surrounding Focus Financial Partners Inc. (NASDAQ:FOCS).
Do Hedge Funds Think FOCS Is A Good Stock To Buy Now?
At the end of March, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 156% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in FOCS a year ago. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
The largest stake in Focus Financial Partners Inc. (NASDAQ:FOCS) was held by Soros Fund Management, which reported holding $29.3 million worth of stock at the end of December. It was followed by Millennium Management with a $15.2 million position. Other investors bullish on the company included CaaS Capital, Gillson Capital, and Marshall Wace LLP. In terms of the portfolio weights assigned to each position Pinz Capital allocated the biggest weight to Focus Financial Partners Inc. (NASDAQ:FOCS), around 0.9% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, earmarking 0.7 percent of its 13F equity portfolio to FOCS.
Now, key hedge funds have been driving this bullishness. CaaS Capital, managed by Frank Fu, established the biggest position in Focus Financial Partners Inc. (NASDAQ:FOCS). CaaS Capital had $11.8 million invested in the company at the end of the quarter. Daniel Johnson’s Gillson Capital also made a $8.4 million investment in the stock during the quarter. The other funds with brand new FOCS positions are Benjamin A. Smith’s Laurion Capital Management, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, 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 Focus Financial Partners Inc. (NASDAQ:FOCS). We will take a look at Verint Systems Inc. (NASDAQ:VRNT), AtriCure Inc. (NASDAQ:ATRC), Gibraltar Industries Inc (NASDAQ:ROCK), Liberty Latin America Ltd. (NASDAQ:LILAK), Liberty Latin America Ltd. (NASDAQ:LILA), J&J Snack Foods Corp. (NASDAQ:JJSF), and Herc Holdings Inc. (NYSE:HRI). All of these stocks’ market caps are closest to FOCS’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 19.3 hedge funds with bullish positions and the average amount invested in these stocks was $356 million. That figure was $109 million in FOCS’s case. Liberty Latin America Ltd. (NASDAQ:LILAK) is the most popular stock in this table. On the other hand AtriCure Inc. (NASDAQ:ATRC) is the least popular one with only 14 bullish hedge fund positions. Focus Financial Partners Inc. (NASDAQ:FOCS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FOCS is 70. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and still beat the market by 7.7 percentage points. Hedge funds were also right about betting on FOCS as the stock returned 19.8% since the end of Q1 (through 7/16) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.