Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in FNF Group of Fidelity National Financial, Inc. (NYSE:FNF)? The smart money sentiment can provide an answer to this question.
Is FNF Group of Fidelity National Financial, Inc. (NYSE:FNF) a buy here? Investors who are in the know are turning less bullish. The number of bullish hedge fund bets were cut by 2 recently. At the end of this article we will also compare FNF to other stocks including CMS Energy Corporation (NYSE:CMS), Fastenal Company (NASDAQ:FAST), and MGM Resorts International (NYSE:MGM) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Keeping this in mind, we’re going to analyze the latest action regarding FNF Group of Fidelity National Financial, Inc. (NYSE:FNF).
Hedge fund activity in FNF Group of Fidelity National Financial, Inc. (NYSE:FNF)
Heading into the fourth quarter of 2016, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a 5% fall from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Corvex Capital, managed by Keith Meister, holds the most valuable position in FNF Group of Fidelity National Financial, Inc. (NYSE:FNF). Corvex Capital has a $397.5 million position in the stock, comprising 7.4% of its 13F portfolio. Coming in second is Orbis Investment Management, managed by William B. Gray, which holds a $153.3 million position; 1.1% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish comprise Daniel S. Och’s OZ Management, Richard Barrera’s Roystone Capital Partners and Alok Agrawal’s Bloom Tree Partners.
Seeing as FNF Group of Fidelity National Financial, Inc. (NYSE:FNF) has faced a decline in interest from the smart money, it’s safe to say that there lies a certain “tier” of hedge funds who were dropping their positions entirely last quarter. At the top of the heap, Mark Kingdon’s Kingdon Capital said goodbye to the largest stake of all the hedgies tracked by Insider Monkey, valued at about $20.6 million in stock. Andrew Feldstein and Stephen Siderow’s fund, Blue Mountain Capital, also sold off its stock, about $8.8 million worth of shares. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to FNF Group of Fidelity National Financial, Inc. (NYSE:FNF). We will take a look at CMS Energy Corporation (NYSE:CMS), Fastenal Company (NASDAQ:FAST), MGM Resorts International (NYSE:MGM), and Marathon Oil Corporation (NYSE:MRO). This group of stocks’ market values are closest to FNF’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 29.25 hedge funds with bullish positions and the average amount invested in these stocks was $884 million. That figure was $1.13 billion in FNF’s case. MGM Resorts International (NYSE:MGM) is the most popular stock in this table. On the other hand CMS Energy Corporation (NYSE:CMS) is the least popular one with only 19 bullish hedge fund positions. FNF Group of Fidelity National Financial, Inc. (NYSE:FNF) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MGM might be a better candidate to consider a long position.