Is Franks International (FI) A Good Stock To Buy Now?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Franks International NV (NYSE:FI).

Is FI a good stock to buy now? Franks International NV (NYSE:FI) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that FI 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). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Prevail Therapeutics Inc. (NASDAQ:PRVL), Intelligent Systems Corporation (NYSE:INS), and Daseke, Inc. (NASDAQ:DSKE) to gather more data points.

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.

Ian Wace Marshall Wace

Ian Wace of Marshall Wace

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. Now we’re going to view the new hedge fund action regarding Franks International NV (NYSE:FI).

Do Hedge Funds Think MCRI Is A Good Stock To Buy Now?

Heading into the fourth quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FI over the last 21 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the number one position in Franks International NV (NYSE:FI). D E Shaw has a $1.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Phill Gross and Robert Atchinson of Adage Capital Management, with a $1.4 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that hold long positions encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Renaissance Technologies and Paul Marshall and Ian Wace’s Marshall Wace LLP. In terms of the portfolio weights assigned to each position Adage Capital Management allocated the biggest weight to Franks International NV (NYSE:FI), around 0.0034% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, dishing out 0.0021 percent of its 13F equity portfolio to FI.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Caxton Associates LP. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Renaissance Technologies).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Franks International NV (NYSE:FI) but similarly valued. We will take a look at Prevail Therapeutics Inc. (NASDAQ:PRVL), Intelligent Systems Corporation (NYSE:INS), Daseke, Inc. (NASDAQ:DSKE), ANI Pharmaceuticals Inc (NASDAQ:ANIP), Hemisphere Media Group Inc (NASDAQ:HMTV), Luxfer Holdings PLC (NYSE:LXFR), and International General Insurance Holdings Ltd. (NASDAQ:IGIC). This group of stocks’ market values are similar to FI’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PRVL 12 205610 1
INS 8 47979 0
DSKE 11 15708 2
ANIP 8 12473 -2
HMTV 6 24902 -2
LXFR 12 71054 1
IGIC 9 11712 0
Average 9.4 55634 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.4 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $5 million in FI’s case. Prevail Therapeutics Inc. (NASDAQ:PRVL) is the most popular stock in this table. On the other hand Hemisphere Media Group Inc (NASDAQ:HMTV) is the least popular one with only 6 bullish hedge fund positions. Franks International NV (NYSE:FI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FI is 48. 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. A small number of hedge funds were also right about betting on FI as the stock returned 84.4% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.