In this article we will check out the progression of hedge fund sentiment towards Five Point Holdings, LLC (NYSE:FPH) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is FPH a good stock to buy now? Five Point Holdings, LLC (NYSE:FPH) has seen a decrease in hedge fund sentiment lately. Five Point Holdings, LLC (NYSE:FPH) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 17. Our calculations also showed that FPH 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.
According to most shareholders, hedge funds are perceived as slow, outdated financial vehicles of yesteryear. While there are more than 8000 funds in operation at present, Our researchers choose to focus on the masters of this club, around 850 funds. These investment experts direct bulk of the hedge fund industry’s total capital, and by watching their best equity investments, Insider Monkey has deciphered a number of investment strategies that have historically surpassed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy beat 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 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 latest hedge fund action encompassing Five Point Holdings, LLC (NYSE:FPH).
Do Hedge Funds Think FPH Is A Good Stock To Buy Now?
At third quarter’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FPH over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Among these funds, Luxor Capital Group held the most valuable stake in Five Point Holdings, LLC (NYSE:FPH), which was worth $57.5 million at the end of the third quarter. On the second spot was Third Avenue Management which amassed $42.9 million worth of shares. Long Pond Capital, Glendon Capital Management, and Scoggin 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 Third Avenue Management allocated the biggest weight to Five Point Holdings, LLC (NYSE:FPH), around 5.96% of its 13F portfolio. Scoggin is also relatively very bullish on the stock, setting aside 2.59 percent of its 13F equity portfolio to FPH.
Judging by the fact that Five Point Holdings, LLC (NYSE:FPH) has faced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of hedgies that decided to sell off their full holdings heading into Q4. Intriguingly, Donald Sussman’s Paloma Partners dropped the biggest position of all the hedgies monitored by Insider Monkey, worth close to $0.1 million in stock. Noam Gottesman’s fund, GLG Partners, also dropped its stock, about $0.1 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 1 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Five Point Holdings, LLC (NYSE:FPH). These stocks are Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD), Tilray, Inc. (NASDAQ:TLRY), Saul Centers Inc (NYSE:BFS), ARMOUR Residential REIT, Inc. (NYSE:ARR), Ready Capital Corporation (NYSE:RC), Inozyme Pharma, Inc. (NASDAQ:INZY), and Cellcom Israel Ltd. (NYSE:CEL). This group of stocks’ market caps are closest to FPH’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 9.9 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $144 million in FPH’s case. Great Lakes Dredge & Dock Corporation (NASDAQ:GLDD) is the most popular stock in this table. On the other hand Cellcom Israel Ltd. (NYSE:CEL) is the least popular one with only 2 bullish hedge fund positions. Five Point Holdings, LLC (NYSE:FPH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FPH is 57.5. 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 FPH as the stock returned 31.9% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.