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Hedge Funds Have Never Been This Bullish On FTI Consulting, Inc. (FCN)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of FTI Consulting, Inc. (NYSE:FCN) based on that data and determine whether they were really smart about the stock.

Is FTI Consulting, Inc. (NYSE:FCN) ready to rally soon? Money managers were in an optimistic mood. The number of long hedge fund positions rose by 13 in recent months. FTI Consulting, Inc. (NYSE:FCN) was in 32 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 21. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FCN 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Millennium Management, Catapult Capital Management

Israel Englander of Millennium 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 glance at the latest hedge fund action encompassing FTI Consulting, Inc. (NYSE:FCN).

What have hedge funds been doing with FTI Consulting, Inc. (NYSE:FCN)?

At the end of the second quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 68% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in FCN over the last 20 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Is FCN A Good Stock To Buy?

Among these funds, Greenvale Capital held the most valuable stake in FTI Consulting, Inc. (NYSE:FCN), which was worth $63.2 million at the end of the third quarter. On the second spot was Nitorum Capital which amassed $62.6 million worth of shares. Millennium Management, Renaissance Technologies, and AQR Capital Management 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 Greenvale Capital allocated the biggest weight to FTI Consulting, Inc. (NYSE:FCN), around 9.73% of its 13F portfolio. Kingstown Capital Management is also relatively very bullish on the stock, earmarking 8.76 percent of its 13F equity portfolio to FCN.

Now, key money managers were breaking ground themselves. Nitorum Capital, managed by Seth Rosen, established the largest position in FTI Consulting, Inc. (NYSE:FCN). Nitorum Capital had $62.6 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $25.6 million position during the quarter. The other funds with new positions in the stock are Michael Blitzer’s Kingstown Capital Management, Angela Aldrich’s Bayberry Capital Partners, and Vikas Lunia’s Lunia Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as FTI Consulting, Inc. (NYSE:FCN) but similarly valued. These stocks are Tata Motors Limited (NYSE:TTM), Blueprint Medicines Corporation (NASDAQ:BPMC), Under Armour Inc (NYSE:UA), Starwood Property Trust, Inc. (NYSE:STWD), Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH), Youdao, Inc. (NYSE:DAO), and Healthequity Inc (NASDAQ:HQY). All of these stocks’ market caps are closest to FCN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TTM 9 36380 -1
BPMC 38 1004517 2
UA 40 558888 3
STWD 22 168439 -1
NCLH 28 170565 8
DAO 13 381255 7
HQY 18 164752 -1
Average 24 354971 2.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $355 million. That figure was $378 million in FCN’s case. Under Armour Inc (NYSE:UA) is the most popular stock in this table. On the other hand Tata Motors Limited (NYSE:TTM) is the least popular one with only 9 bullish hedge fund positions. FTI Consulting, Inc. (NYSE:FCN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FCN is 77.1. 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 FCN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FCN were disappointed as the stock returned -5.8% 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.