In this article we will analyze whether Fidelity National Financial Inc (NYSE:FNF) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is Fidelity National Financial Inc (NYSE:FNF) a great stock to buy now? Hedge funds were taking a pessimistic view. The number of bullish hedge fund bets retreated by 1 recently. Fidelity National Financial Inc (NYSE:FNF) was in 39 hedge funds’ portfolios at the end of March. The all time high for this statistic is 47. Our calculations also showed that FNF isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Seth Klarman of Baupost Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to analyze the latest hedge fund action surrounding Fidelity National Financial Inc (NYSE:FNF).
Do Hedge Funds Think FNF Is A Good Stock To Buy Now?
At the end of March, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FNF over the last 23 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
More specifically, Windacre Partnership was the largest shareholder of Fidelity National Financial Inc (NYSE:FNF), with a stake worth $455.3 million reported as of the end of March. Trailing Windacre Partnership was Baupost Group, which amassed a stake valued at $123.5 million. AQR Capital Management, MFN Partners, and Parsifal 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 Windacre Partnership allocated the biggest weight to Fidelity National Financial Inc (NYSE:FNF), around 11.33% of its 13F portfolio. Parsifal Capital Management is also relatively very bullish on the stock, earmarking 6.83 percent of its 13F equity portfolio to FNF.
Seeing as Fidelity National Financial Inc (NYSE:FNF) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of money managers that elected to cut their full holdings by the end of the first quarter. It’s worth mentioning that Ravi Chopra’s Azora Capital dumped the biggest investment of the 750 funds watched by Insider Monkey, valued at about $46.1 million in stock. Steve Cohen’s fund, Point72 Asset Management, also dropped its stock, about $29.8 million worth. These moves are important to note, as total hedge fund interest was cut by 1 funds by the end of the first quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Fidelity National Financial Inc (NYSE:FNF) but similarly valued. These stocks are Tuya Inc. (NYSE:TUYA), Zai Lab Limited (NASDAQ:ZLAB), DaVita Inc (NYSE:DVA), Autohome Inc (NYSE:ATHM), Lennox International Inc. (NYSE:LII), Vail Resorts, Inc. (NYSE:MTN), and China Eastern Airlines Corp. Ltd. (NYSE:CEA). This group of stocks’ market caps resemble FNF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TUYA | 15 | 231919 | 15 |
| ZLAB | 32 | 666075 | 2 |
| DVA | 34 | 4398979 | 2 |
| ATHM | 18 | 588993 | 2 |
| LII | 25 | 395757 | -2 |
| MTN | 36 | 1091529 | 5 |
| CEA | 3 | 2009 | 2 |
| Average | 23.3 | 1053609 | 3.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.3 hedge funds with bullish positions and the average amount invested in these stocks was $1054 million. That figure was $1164 million in FNF’s case. Vail Resorts, Inc. (NYSE:MTN) is the most popular stock in this table. On the other hand China Eastern Airlines Corp. Ltd. (NYSE:CEA) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Fidelity National Financial Inc (NYSE:FNF) is more popular among hedge funds. Our overall hedge fund sentiment score for FNF is 78.9. 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 19.3% in 2021 through June 25th and still managed to beat the market by 4.8 percentage points. Hedge funds were also right about betting on FNF, though not to the same extent, as the stock returned 10.9% since the end of March (through June 25th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
