With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Franklin Covey Co. (NYSE:FC).
Is FC a good stock to buy now? Franklin Covey Co. (NYSE:FC) investors should be aware of a decrease in enthusiasm from smart money of late. Franklin Covey Co. (NYSE:FC) was in 10 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 13. There were 12 hedge funds in our database with FC positions at the end of the second quarter. Our calculations also showed that FC 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.
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. With all of this in mind we’re going to take a look at the key hedge fund action surrounding Franklin Covey Co. (NYSE:FC).
Do Hedge Funds Think FC Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in FC over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Renaissance Technologies has the number one position in Franklin Covey Co. (NYSE:FC), worth close to $4 million, corresponding to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $2.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions contain John Overdeck and David Siegel’s Two Sigma Advisors, D. E. Shaw’s D E Shaw and Paul Marshall and Ian Wace’s Marshall Wace LLP. In terms of the portfolio weights assigned to each position Engineers Gate Manager allocated the biggest weight to Franklin Covey Co. (NYSE:FC), around 0.02% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to FC.
Due to the fact that Franklin Covey Co. (NYSE:FC) has experienced declining sentiment from hedge fund managers, it’s easy to see that there were a few hedge funds who sold off their full holdings by the end of the third quarter. Intriguingly, Brian C. Freckmann’s Lyon Street Capital sold off the largest stake of the “upper crust” of funds followed by Insider Monkey, worth an estimated $2.3 million in stock. Ken Griffin’s fund, Citadel Investment Group, also sold off its stock, about $1.7 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 2 funds by the end of the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Franklin Covey Co. (NYSE:FC) but similarly valued. We will take a look at Investors Title Company (NASDAQ:ITIC), Party City Holdco Inc (NYSE:PRTY), Gold Standard Ventures Corp (NYSE:GSV), Lannett Company, Inc. (NYSE:LCI), Paratek Pharmaceuticals Inc (NASDAQ:PRTK), America First Multifamily Investors, L.P. (NASDAQ:ATAX), and Rafael Holdings, Inc. (NYSE:RFL). All of these stocks’ market caps resemble FC’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 7.1 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $12 million in FC’s case. Party City Holdco Inc (NYSE:PRTY) is the most popular stock in this table. On the other hand America First Multifamily Investors, L.P. (NASDAQ:ATAX) is the least popular one with only 1 bullish hedge fund positions. Franklin Covey Co. (NYSE:FC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FC is 67. 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 FC as the stock returned 30.9% 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.