In this article we will analyze whether frontdoor, inc. (NASDAQ:FTDR) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is FTDR a good stock to buy now? frontdoor, inc. (NASDAQ:FTDR) has experienced a decrease in hedge fund sentiment in recent months. frontdoor, inc. (NASDAQ:FTDR) was in 38 hedge funds’ portfolios at the end of September. The all time high for this statistic is 41. There were 41 hedge funds in our database with FTDR positions at the end of the second quarter. Our calculations also showed that FTDR 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 21st century investor’s toolkit there are tons of methods shareholders use to value publicly traded companies. A couple of the most useful methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can outclass their index-focused peers by a healthy margin (see the details here).
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 let’s take a peek at the key hedge fund action encompassing frontdoor, inc. (NASDAQ:FTDR).
Do Hedge Funds Think FTDR Is A Good Stock To Buy Now?
At Q3’s end, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the previous quarter. By comparison, 39 hedge funds held shares or bullish call options in FTDR a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the most valuable position in frontdoor, inc. (NASDAQ:FTDR), worth close to $94.4 million, corresponding to 0.1% of its total 13F portfolio. The second largest stake is held by Iridian Asset Management, led by David Cohen and Harold Levy, holding a $79.7 million position; the fund has 1.7% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions include Richard Mashaal’s Rima Senvest Management, Jeffrey Gates’s Gates Capital Management and Lee Ainslie’s Maverick Capital. In terms of the portfolio weights assigned to each position StackLine Partners allocated the biggest weight to frontdoor, inc. (NASDAQ:FTDR), around 13.12% of its 13F portfolio. Impactive Capital is also relatively very bullish on the stock, setting aside 10.6 percent of its 13F equity portfolio to FTDR.
Since frontdoor, inc. (NASDAQ:FTDR) has faced falling interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few funds that slashed their full holdings heading into Q4. At the top of the heap, Richard Scott Greeder’s Broad Bay Capital dropped the largest investment of the “upper crust” of funds tracked by Insider Monkey, valued at about $18 million in stock. Eric F. Billings’s fund, Billings Capital Management, also said goodbye to its stock, about $7.5 million worth. These moves are interesting, as total hedge fund interest fell by 3 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks similar to frontdoor, inc. (NASDAQ:FTDR). We will take a look at Scientific Games Corp (NASDAQ:SGMS), Ardagh Group S.A. (NYSE:ARD), I-Mab (NASDAQ:IMAB), Louisiana-Pacific Corporation (NYSE:LPX), Power Integrations Inc (NASDAQ:POWI), Companhia Brasileira de Distrib. (NYSE:CBD), and New Residential Investment Corp (NYSE:NRZ). All of these stocks’ market caps are closest to FTDR’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 18.7 hedge funds with bullish positions and the average amount invested in these stocks was $286 million. That figure was $695 million in FTDR’s case. Louisiana-Pacific Corporation (NYSE:LPX) is the most popular stock in this table. On the other hand Ardagh Group S.A. (NYSE:ARD) is the least popular one with only 7 bullish hedge fund positions. frontdoor, inc. (NASDAQ:FTDR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FTDR is 76.8. 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 FTDR as the stock returned 31% since the end of Q3 (through 12/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.