Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Floor & Decor Holdings, Inc. (NYSE:FND) to find out whether there were any major changes in hedge funds’ views.
Floor & Decor Holdings, Inc. (NYSE:FND) was in 33 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 44. FND has seen an increase in hedge fund sentiment of late. There were 28 hedge funds in our database with FND holdings at the end of June. Our calculations also showed that FND isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now we’re going to review the new hedge fund action encompassing Floor & Decor Holdings, Inc. (NYSE:FND).
Do Hedge Funds Think FND Is A Good Stock To Buy Now?
At third quarter’s end, a total of 33 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 18% from the second quarter of 2021. On the other hand, there were a total of 42 hedge funds with a bullish position in FND a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Abdiel Capital Advisors held the most valuable stake in Floor & Decor Holdings, Inc. (NYSE:FND), which was worth $602 million at the end of the third quarter. On the second spot was Two Creeks Capital Management which amassed $290.5 million worth of shares. Berkshire Hathaway, Melvin Capital Management, and Park Presidio Capital 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 Two Creeks Capital Management allocated the biggest weight to Floor & Decor Holdings, Inc. (NYSE:FND), around 15.38% of its 13F portfolio. Abdiel Capital Advisors is also relatively very bullish on the stock, designating 14.82 percent of its 13F equity portfolio to FND.
As aggregate interest increased, some big names were leading the bulls’ herd. Berkshire Hathaway, managed by Warren Buffett, initiated the largest position in Floor & Decor Holdings, Inc. (NYSE:FND). Berkshire Hathaway had $98.7 million invested in the company at the end of the quarter. Gabriel Plotkin’s Melvin Capital Management also made a $64.6 million investment in the stock during the quarter. The following funds were also among the new FND investors: John Kim’s Night Owl Capital Management, Jinghua Yan’s TwinBeech Capital, and Greg Eisner’s Engineers Gate Manager.
Let’s also examine hedge fund activity in other stocks similar to Floor & Decor Holdings, Inc. (NYSE:FND). We will take a look at DENTSPLY SIRONA Inc. (NASDAQ:XRAY), Korea Electric Power Corporation (NYSE:KEP), AMERCO (NASDAQ:UHAL), Guardant Health, Inc. (NASDAQ:GH), Agnico Eagle Mines Limited (NYSE:AEM), Campbell Soup Company (NYSE:CPB), and LPL Financial Holdings Inc (NASDAQ:LPLA). All of these stocks’ market caps match FND’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XRAY | 35 | 745567 | 0 |
| KEP | 3 | 22067 | -1 |
| UHAL | 25 | 900713 | 4 |
| GH | 31 | 1515303 | -18 |
| AEM | 33 | 415664 | 4 |
| CPB | 29 | 443269 | 2 |
| LPLA | 37 | 1690118 | -11 |
| Average | 27.6 | 818957 | -2.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $819 million. That figure was $1418 million in FND’s case. LPL Financial Holdings Inc (NASDAQ:LPLA) is the most popular stock in this table. On the other hand Korea Electric Power Corporation (NYSE:KEP) is the least popular one with only 3 bullish hedge fund positions. Floor & Decor Holdings, Inc. (NYSE:FND) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FND is 76.6. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on FND as the stock returned 6.7% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Floor & Decor Holdings Inc. (NYSE:FND)
Follow Floor & Decor Holdings Inc. (NYSE:FND)
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Disclosure: None. This article was originally published at Insider Monkey.
