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Here’s What Hedge Funds Think About Federated Investors Inc (FII)

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Federated Investors Inc (NYSE:FII) in this article.

Federated Investors Inc (NYSE:FII) was in 13 hedge funds’ portfolios at the end of March. FII investors should pay attention to a decrease in support from the world’s most elite money managers in recent months. There were 15 hedge funds in our database with FII positions at the end of the previous quarter. Our calculations also showed that FII isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

Let’s take a look at the new hedge fund action surrounding Federated Investors Inc (NYSE:FII).

What have hedge funds been doing with Federated Investors Inc (NYSE:FII)?

At Q1’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FII over the last 15 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

FII_june2019

Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the most valuable position in Federated Investors Inc (NYSE:FII). AQR Capital Management has a $38.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $31.5 million position; 0.1% of its 13F portfolio is allocated to the company. Some other peers with similar optimism comprise Israel Englander’s Millennium Management, Chuck Royce’s Royce & Associates and John D. Gillespie’s Prospector Partners.

Because Federated Investors Inc (NYSE:FII) has witnessed declining sentiment from the entirety of the hedge funds we track, we can see that there were a few funds that decided to sell off their positions entirely heading into Q3. It’s worth mentioning that Jim Simons’s Renaissance Technologies dropped the biggest position of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $10.9 million in stock. Usman Waheed’s fund, Strycker View Capital, also dumped its stock, about $6.6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 2 funds heading into Q3.

Let’s also examine hedge fund activity in other stocks similar to Federated Investors Inc (NYSE:FII). These stocks are CVB Financial Corp. (NASDAQ:CVBF), Chemical Financial Corporation (NASDAQ:CHFC), UniFirst Corp (NYSE:UNF), and NuVasive, Inc. (NASDAQ:NUVA). All of these stocks’ market caps resemble FII’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CVBF 12 41422 3
CHFC 18 96012 8
UNF 21 163958 7
NUVA 20 248855 0
Average 17.75 137562 4.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.75 hedge funds with bullish positions and the average amount invested in these stocks was $138 million. That figure was $131 million in FII’s case. UniFirst Corp (NYSE:UNF) is the most popular stock in this table. On the other hand CVB Financial Corp. (NASDAQ:CVBF) is the least popular one with only 12 bullish hedge fund positions. Federated Investors Inc (NYSE:FII) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on FII as the stock returned 9.3% during the same time frame and outperformed the market by an even larger margin.

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

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