At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Four Corners Property Trust, Inc. (NYSE:FCPT) at the end of the second quarter and determine whether the smart money was really smart about this stock.
Four Corners Property Trust, Inc. (NYSE:FCPT) investors should be aware of an increase in hedge fund interest recently. Four Corners Property Trust, Inc. (NYSE:FCPT) was in 19 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 25. Our calculations also showed that FCPT isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.
At the moment there are a lot of metrics market participants employ to appraise publicly traded companies. A duo of the less utilized metrics are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the top money managers can outpace their index-focused peers by a solid amount (see the details here).
David Harding of Winton Capital Management
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 are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. Keeping this in mind let’s check out the new hedge fund action encompassing Four Corners Property Trust, Inc. (NYSE:FCPT).
What have hedge funds been doing with Four Corners Property Trust, Inc. (NYSE:FCPT)?
At second quarter’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 36% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FCPT over the last 20 quarters. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Eduardo Abush’s Waterfront Capital Partners has the number one position in Four Corners Property Trust, Inc. (NYSE:FCPT), worth close to $16.1 million, accounting for 2.7% of its total 13F portfolio. On Waterfront Capital Partners’s heels is Millennium Management, managed by Israel Englander, which holds a $9.7 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions include Jed Nussdorf’s Soapstone Capital, Ken Griffin’s Citadel Investment Group and James Morrow’s Callodine Capital Management. In terms of the portfolio weights assigned to each position Soapstone Capital allocated the biggest weight to Four Corners Property Trust, Inc. (NYSE:FCPT), around 4.57% of its 13F portfolio. Callodine Capital Management is also relatively very bullish on the stock, dishing out 2.99 percent of its 13F equity portfolio to FCPT.
As one would reasonably expect, specific money managers were leading the bulls’ herd. Callodine Capital Management, managed by James Morrow, assembled the largest position in Four Corners Property Trust, Inc. (NYSE:FCPT). Callodine Capital Management had $6.1 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $4.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Brandon Haley’s Holocene Advisors, David Harding’s Winton Capital Management, and Mika Toikka’s AlphaCrest Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Four Corners Property Trust, Inc. (NYSE:FCPT). We will take a look at Paramount Group Inc (NYSE:PGRE), Silicon Motion Technology Corp. (NASDAQ:SIMO), WW International, Inc. (NASDAQ:WW), CareDx, Inc. (NASDAQ:CDNA), Sanmina Corporation (NASDAQ:SANM), Intra-Cellular Therapies Inc (NASDAQ:ITCI), and Northwest Natural Holding Company (NYSE:NWN). This group of stocks’ market values are similar to FCPT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PGRE | 21 | 97593 | 2 |
| SIMO | 17 | 278039 | -1 |
| WW | 26 | 284887 | 4 |
| CDNA | 23 | 257926 | 6 |
| SANM | 20 | 144125 | 5 |
| ITCI | 13 | 112591 | -6 |
| NWN | 14 | 29553 | -3 |
| Average | 19.1 | 172102 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.1 hedge funds with bullish positions and the average amount invested in these stocks was $172 million. That figure was $70 million in FCPT’s case. WW International, Inc. (NASDAQ:WW) is the most popular stock in this table. On the other hand Intra-Cellular Therapies Inc (NASDAQ:ITCI) is the least popular one with only 13 bullish hedge fund positions. Four Corners Property Trust, Inc. (NYSE:FCPT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FCPT is 55.9. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 24.8% in 2020 through the end of September and surpassed the market by 19.3 percentage points. Unfortunately FCPT wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); FCPT investors were disappointed as the stock returned 6.1% in the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
