Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Hedge fund interest in Four Corners Property Trust, Inc. (NYSE:FCPT) 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 Power Integrations Inc (NASDAQ:POWI), Invesco Mortgage Capital Inc (NYSE:IVR), and Commercial Metals Company (NYSE:CMC) to gather more data points.
If you’d ask most shareholders, hedge funds are viewed as slow, old financial vehicles of the past. While there are more than 8000 funds trading at present, We hone in on the moguls of this group, approximately 750 funds. These money managers preside over the lion’s share of the smart money’s total capital, and by shadowing their first-class picks, Insider Monkey has found various investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points a year since its inception in May 2014 through June 18th. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 28.2% since February 2017 (through June 18th) even though the market was up nearly 30% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 8.2% in a month whereas our long picks outperformed the market by 2.5 percentage points in this volatile 5 week period (our long picks also beat the market by 15 percentage points so far this year).
Let’s check out the recent hedge fund action surrounding Four Corners Property Trust, Inc. (NYSE:FCPT).
How have hedgies been trading Four Corners Property Trust, Inc. (NYSE:FCPT)?
At the end of the first quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in FCPT a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Four Corners Property Trust, Inc. (NYSE:FCPT) was held by Carlson Capital, which reported holding $22.8 million worth of stock at the end of March. It was followed by Waterfront Capital Partners with a $21.6 million position. Other investors bullish on the company included Millennium Management, Renaissance Technologies, and D E Shaw.
Seeing as Four Corners Property Trust, Inc. (NYSE:FCPT) has faced a decline in interest from hedge fund managers, it’s easy to see that there is a sect of funds that elected to cut their positions entirely in the third quarter. Intriguingly, Richard Driehaus’s Driehaus Capital dumped the largest investment of the 700 funds tracked by Insider Monkey, totaling an estimated $0.7 million in stock. Paul Marshall and Ian Wace’s fund, Marshall Wace LLP, also sold off its stock, about $0 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to Four Corners Property Trust, Inc. (NYSE:FCPT). We will take a look at Power Integrations Inc (NASDAQ:POWI), Invesco Mortgage Capital Inc (NYSE:IVR), Commercial Metals Company (NYSE:CMC), and Granite Construction Incorporated (NYSE:GVA). This group of stocks’ market valuations are closest to FCPT’s market valuation.
|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 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $134 million. That figure was $93 million in FCPT’s case. Invesco Mortgage Capital Inc (NYSE:IVR) is the most popular stock in this table. On the other hand Power Integrations Inc (NASDAQ:POWI) is the least popular one with only 6 bullish hedge fund positions. Four Corners Property Trust, Inc. (NYSE:FCPT) is not the most popular stock in this group but hedge fund interest is still above average. 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 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. Unfortunately FCPT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on FCPT were disappointed as the stock returned -2.8% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.