The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Forum Energy Technologies Inc (NYSE:FET).
Is Forum Energy Technologies (NYSE:FET) a good stock to buy now? Investors who are in the know were in a bearish mood. The number of bullish hedge fund bets shrunk by 8 lately. Forum Energy Technologies Inc (NYSE:FET) was in 6 hedge funds’ portfolios at the end of September. The all time high for this statistics is 20. Our calculations also showed that FET 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.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Keeping this in mind we’re going to analyze the recent hedge fund action surrounding Forum Energy Technologies Inc (NYSE:FET).
What does smart money think about Forum Energy Technologies Inc (NYSE:FET)?
Heading into the fourth quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of -57% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in FET a year ago. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Noah Levy and Eugene Dozortsev’s Newtyn Management has the most valuable position in Forum Energy Technologies Inc (NYSE:FET), worth close to $1.1 million, amounting to 0.3% of its total 13F portfolio. On Newtyn Management’s heels is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $0.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions comprise D. E. Shaw’s D E Shaw, Chuck Royce’s Royce & Associates and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Newtyn Management allocated the biggest weight to Forum Energy Technologies Inc (NYSE:FET), around 0.27% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.0015 percent of its 13F equity portfolio to FET.
Due to the fact that Forum Energy Technologies Inc (NYSE:FET) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers that slashed their positions entirely by the end of the third quarter. Intriguingly, Cliff Asness’s AQR Capital Management dumped the largest stake of all the hedgies monitored by Insider Monkey, totaling an estimated $0.4 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also said goodbye to its stock, about $0.3 million worth. These moves are interesting, as total hedge fund interest dropped by 8 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Forum Energy Technologies Inc (NYSE:FET). We will take a look at Tuanche Limited (NASDAQ:TC), Great Elm Capital Group, Inc. (NASDAQ:GEC), Hennessy Advisors, Inc. (NASDAQ:HNNA), TDH Holdings, Inc. (NASDAQ:PETZ), Titan Medical Inc. (NASDAQ:TMDI), Celcuity Inc. (NASDAQ:CELC), and Armata Pharmaceuticals, Inc. (NYSE:ARMP). All of these stocks’ market caps match FET’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TC | 1 | 11 | 0 |
| GEC | 8 | 19722 | 0 |
| HNNA | 2 | 1081 | 0 |
| PETZ | 1 | 130 | 0 |
| TMDI | 3 | 1284 | -3 |
| CELC | 1 | 307 | -2 |
| ARMP | 1 | 299 | 0 |
| Average | 2.4 | 3262 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 2.4 hedge funds with bullish positions and the average amount invested in these stocks was $3 million. That figure was $2 million in FET’s case. Great Elm Capital Group, Inc. (NASDAQ:GEC) is the most popular stock in this table. On the other hand Tuanche Limited (NASDAQ:TC) is the least popular one with only 1 bullish hedge fund positions. Forum Energy Technologies Inc (NYSE:FET) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FET is 41.7. 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. Hedge funds were also right about betting on FET as the stock returned 26.4% since the end of Q3 (through 11/27) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Forum Energy Technologies Inc. (NYSE:FET)
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Disclosure: None. This article was originally published at Insider Monkey.
