Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Shift4 Payments, Inc. (NYSE:FOUR).
Is FOUR a good stock to buy? Money managers were getting more optimistic. The number of bullish hedge fund positions moved up by 17 in recent months. Shift4 Payments, Inc. (NYSE:FOUR) was in 32 hedge funds’ portfolios at the end of September. The all time high for this statistic is 15. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FOUR 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely 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 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 take a peek at the key hedge fund action regarding Shift4 Payments, Inc. (NYSE:FOUR).
Do Hedge Funds Think FOUR Is A Good Stock To Buy Now?
At the end of September, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 113% from the second quarter of 2020. By comparison, 0 hedge funds held shares or bullish call options in FOUR a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Shift4 Payments, Inc. (NYSE:FOUR) was held by Millennium Management, which reported holding $24.5 million worth of stock at the end of September. It was followed by Senator Investment Group with a $24.2 million position. Other investors bullish on the company included Moore Global Investments, Islet Management, and Select Equity Group. In terms of the portfolio weights assigned to each position Pinz Capital allocated the biggest weight to Shift4 Payments, Inc. (NYSE:FOUR), around 2.31% of its 13F portfolio. Black-and-White Capital is also relatively very bullish on the stock, earmarking 2.17 percent of its 13F equity portfolio to FOUR.
Now, key money managers were breaking ground themselves. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, established the most valuable position in Shift4 Payments, Inc. (NYSE:FOUR). Senator Investment Group had $24.2 million invested in the company at the end of the quarter. Joseph Samuels’s Islet Management also initiated a $21.8 million position during the quarter. The other funds with brand new FOUR positions are Robert Joseph Caruso’s Select Equity Group, Seth Wunder’s Black-and-White Capital, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Shift4 Payments, Inc. (NYSE:FOUR) but similarly valued. These stocks are Parsley Energy Inc (NYSE:PE), Qualys Inc (NASDAQ:QLYS), Rackspace Technology, Inc. (NASDAQ:RXT), New York Community Bancorp, Inc. (NYSE:NYCB), Relay Therapeutics, Inc. (NASDAQ:RLAY), Penske Automotive Group, Inc. (NYSE:PAG), and National General Holdings Corp (NASDAQ:NGHC). This group of stocks’ market caps are closest to FOUR’s market cap.
|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 22.9 hedge funds with bullish positions and the average amount invested in these stocks was $298 million. That figure was $243 million in FOUR’s case. Parsley Energy Inc (NYSE:PE) is the most popular stock in this table. On the other hand Rackspace Technology, Inc. (NASDAQ:RXT) is the least popular one with only 15 bullish hedge fund positions. Shift4 Payments, Inc. (NYSE:FOUR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FOUR is 78.6. 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 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. Hedge funds were also right about betting on FOUR as the stock returned 46.2% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.