At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Fidelity National Financial Inc (NYSE:FNF).
Is FNF a good stock to buy now? Money managers were turning less bullish. The number of bullish hedge fund positions dropped by 3 in recent months. Fidelity National Financial Inc (NYSE:FNF) was in 44 hedge funds’ portfolios at the end of September. 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 Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most traders, hedge funds are viewed as underperforming, old investment vehicles of years past. While there are more than 8000 funds with their doors open today, Our experts hone in on the masters of this club, about 850 funds. Most estimates calculate that this group of people orchestrate the majority of the smart money’s total capital, and by keeping an eye on their matchless picks, Insider Monkey has brought to light a number of investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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. Now let’s view the new hedge fund action encompassing Fidelity National Financial Inc (NYSE:FNF).
Do Hedge Funds Think FNF Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the previous quarter. By comparison, 30 hedge funds held shares or bullish call options in FNF a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Fidelity National Financial Inc (NYSE:FNF) was held by Windacre Partnership, which reported holding $428.5 million worth of stock at the end of September. It was followed by Point72 Asset Management with a $81.8 million position. Other investors bullish on the company included AQR Capital Management, Parsifal Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position Windacre Partnership allocated the biggest weight to Fidelity National Financial Inc (NYSE:FNF), around 13.06% of its 13F portfolio. Parsifal Capital Management is also relatively very bullish on the stock, designating 10.52 percent of its 13F equity portfolio to FNF.
Seeing as Fidelity National Financial Inc (NYSE:FNF) has faced a decline in interest from the entirety of the hedge funds we track, logic holds that there exists a select few fund managers who sold off their full holdings last quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the largest investment of the 750 funds watched by Insider Monkey, valued at an estimated $32.7 million in stock. Carl Tiedemann and Michael Tiedemann’s fund, TIG Advisors, also said goodbye to its stock, about $1.2 million worth. These moves are interesting, as total hedge fund interest dropped by 3 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Fidelity National Financial Inc (NYSE:FNF). We will take a look at Allegion plc (NYSE:ALLE), Universal Health Services, Inc. (NYSE:UHS), IPG Photonics Corporation (NASDAQ:IPGP), WestRock Company (NYSE:WRK), Caesars Entertainment, Inc. (NASDAQ:CZR), The Toro Company (NYSE:TTC), and American Homes 4 Rent (NYSE:AMH). This group of stocks’ market values resemble FNF’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 36 hedge funds with bullish positions and the average amount invested in these stocks was $689 million. That figure was $1066 million in FNF’s case. Caesars Entertainment, Inc. (NASDAQ:CZR) is the most popular stock in this table. On the other hand IPG Photonics Corporation (NASDAQ:IPGP) is the least popular one with only 24 bullish hedge fund positions. Fidelity National Financial Inc (NYSE:FNF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FNF is 50.1. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on FNF as the stock returned 16.1% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Fidelity National Financial Inc (Old Filings) (NYSE:FNF)
Follow Fidelity National Financial Inc (Old Filings) (NYSE:FNF)
Disclosure: None. This article was originally published at Insider Monkey.