Is FLMN Stock A Buy or Sell?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31st. We at Insider Monkey have made an extensive database of more than 887 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Falcon Minerals Corporation (NASDAQ:FLMN) based on those filings.

Is FLMN stock a buy? The best stock pickers were taking an optimistic view. The number of long hedge fund bets advanced by 6 lately. Falcon Minerals Corporation (NASDAQ:FLMN) was in 26 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 22. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FLMN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. With all of this in mind we’re going to take a look at the fresh hedge fund action surrounding Falcon Minerals Corporation (NASDAQ:FLMN).

Do Hedge Funds Think FLMN Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of 30% from the previous quarter. By comparison, 19 hedge funds held shares or bullish call options in FLMN a year ago. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

The largest stake in Falcon Minerals Corporation (NASDAQ:FLMN) was held by Nantahala Capital Management, which reported holding $11.1 million worth of stock at the end of December. It was followed by Samlyn Capital with a $7.2 million position. Other investors bullish on the company included Omega Advisors, Invenomic Capital Management, and MSDC Management. In terms of the portfolio weights assigned to each position Invenomic Capital Management allocated the biggest weight to Falcon Minerals Corporation (NASDAQ:FLMN), around 0.35% of its 13F portfolio. Nantahala Capital Management is also relatively very bullish on the stock, designating 0.35 percent of its 13F equity portfolio to FLMN.

Now, key hedge funds have jumped into Falcon Minerals Corporation (NASDAQ:FLMN) headfirst. Invenomic Capital Management, managed by Ali Motamed, established the biggest position in Falcon Minerals Corporation (NASDAQ:FLMN). Invenomic Capital Management had $1.4 million invested in the company at the end of the quarter. Ken Grossman and Glen Schneider’s SG Capital Management also initiated a $0.1 million position during the quarter. The following funds were also among the new FLMN investors: Nick Thakore’s Diametric Capital, Israel Englander’s Millennium Management, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Falcon Minerals Corporation (NASDAQ:FLMN) but similarly valued. These stocks are Protara Therapeutics, Inc. (NASDAQ:TARA), Steel Partners Holdings LP (NYSE:SPLP), Diamond S Shipping Inc. (NYSE:DSSI), Mayville Engineering Company, Inc. (NYSE:MEC), International Tower Hill Mines Ltd (NYSE:THM), Anworth Mortgage Asset Corporation (NYSE:ANH), and FTS International, Inc. (NYSE:FTSI). This group of stocks’ market valuations are closest to FLMN’s market valuation.

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As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $30 million in FLMN’s case. Protara Therapeutics, Inc. (NASDAQ:TARA) is the most popular stock in this table. On the other hand Mayville Engineering Company, Inc. (NYSE:MEC) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Falcon Minerals Corporation (NASDAQ:FLMN) is more popular among hedge funds. Our overall hedge fund sentiment score for FLMN is 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 12.3% in 2021 through April 19th but still managed to beat the market by 0.9 percentage points. Hedge funds were also right about betting on FLMN as the stock returned 46.7% since the end of December (through 4/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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