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Hedge Funds Warming Up To Fiat Chrysler Automobiles NV (FCAU)

In this article we will check out the progression of hedge fund sentiment towards Fiat Chrysler Automobiles NV (NYSE:FCAU) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is Fiat Chrysler Automobiles NV (NYSE:FCAU) an outstanding investment now? Hedge funds are in a bullish mood. The number of long hedge fund positions moved up by 2 recently. Our calculations also showed that FCAU isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

In today’s marketplace there are several formulas market participants use to assess stocks. Two of the most useful formulas are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can outperform the market by a significant margin (see the details here).

Matthew Hulsizer PEAK6 Capital

Matthew Hulsizer of PEAK6 Capital

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s review the key hedge fund action surrounding Fiat Chrysler Automobiles NV (NYSE:FCAU).

How have hedgies been trading Fiat Chrysler Automobiles NV (NYSE:FCAU)?

Heading into the second quarter of 2020, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the fourth quarter of 2019. By comparison, 27 hedge funds held shares or bullish call options in FCAU a year ago. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).

More specifically, Arrowstreet Capital was the largest shareholder of Fiat Chrysler Automobiles NV (NYSE:FCAU), with a stake worth $170 million reported as of the end of September. Trailing Arrowstreet Capital was Two Sigma Advisors, which amassed a stake valued at $71.5 million. Segantii Capital, Renaissance Technologies, and Aquamarine 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 Aquamarine Capital Management allocated the biggest weight to Fiat Chrysler Automobiles NV (NYSE:FCAU), around 8.9% of its 13F portfolio. Mohnish Pabrai is also relatively very bullish on the stock, earmarking 6.05 percent of its 13F equity portfolio to FCAU.

As aggregate interest increased, key hedge funds have been driving this bullishness. LMR Partners, managed by Ben Levine, Andrew Manuel and Stefan Renold, initiated the most outsized position in Fiat Chrysler Automobiles NV (NYSE:FCAU). LMR Partners had $12.2 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $1.2 million investment in the stock during the quarter. The following funds were also among the new FCAU investors: Mike Vranos’s Ellington, Matthew Hulsizer’s PEAK6 Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s now take a look at hedge fund activity in other stocks similar to Fiat Chrysler Automobiles NV (NYSE:FCAU). We will take a look at Equifax Inc. (NYSE:), Fox Corporation (NASDAQ:FOXA), Vulcan Materials Company (NYSE:VMC), and Boston Properties, Inc. (NYSE:BXP). This group of stocks’ market values match FCAU’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EFX 32 1300733 0
FOXA 38 1563564 1
VMC 49 1119317 -3
BXP 29 185266 9
Average 37 1042220 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 37 hedge funds with bullish positions and the average amount invested in these stocks was $1042 million. That figure was $395 million in FCAU’s case. Vulcan Materials Company (NYSE:VMC) is the most popular stock in this table. On the other hand Boston Properties, Inc. (NYSE:BXP) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Fiat Chrysler Automobiles NV (NYSE:FCAU) is even less popular than BXP. Hedge funds clearly dropped the ball on FCAU as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on FCAU as the stock returned 49.1% so far in the second quarter and outperformed the market by an even larger margin.

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