Insider Monkey finished processing more than 700 13F filings made by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th. What do these smart investors think about Fortis Inc. (NYSE:FTS)?
Hedge fund interest in Fortis Inc. (NYSE:FTS) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Teck Resources Ltd (NYSE:TECK), Seagate Technology plc (NASDAQ:STX), and WestRock Company (NYSE:WRK) to gather more data points.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to take a glance at the key hedge fund action regarding Fortis Inc. (NYSE:FTS).
Hedge fund activity in Fortis Inc. (NYSE:FTS)
Heading into the fourth quarter of 2018, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, representing no change from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in FTS at the beginning of this year. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Phill Gross and Robert Atchinson’s Adage Capital Management has the largest position in Fortis Inc. (NYSE:FTS), worth close to $66.5 million, accounting for 0.1% of its total 13F portfolio. On Adage Capital Management’s heels is Renaissance Technologies, managed by Jim Simons, which holds a $50.6 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining peers that hold long positions include Ken Griffin’s Citadel Investment Group, Ric Dillon’s Diamond Hill Capital and D. E. Shaw’s D E Shaw.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Fortis Inc. (NYSE:FTS) but similarly valued. These stocks are Teck Resources Ltd (NYSE:TECK), Seagate Technology plc (NASDAQ:STX), WestRock Company (NYSE:WRK), and SS&C Technologies Holdings, Inc. (NASDAQ:SSNC). This group of stocks’ market values are closest to FTS’s market value.
|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 34 hedge funds with bullish positions and the average amount invested in these stocks was $1.30 billion. That figure was $231 million in FTS’s case. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is the most popular stock in this table. On the other hand Seagate Technology plc (NASDAQ:STX) is the least popular one with only 27 bullish hedge fund positions. Compared to these stocks Fortis Inc. (NYSE:FTS) is even less popular than STX. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None. This article was originally published at Insider Monkey.