Should You Avoid FTI Consulting, Inc. (FCN)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards FTI Consulting, Inc. (NYSE:FCN).

FTI Consulting, Inc. (NYSE:FCN) investors should pay attention to a decrease in hedge fund interest in recent months. FCN was in 19 hedge funds’ portfolios at the end of March. There were 21 hedge funds in our database with FCN holdings at the end of the previous quarter. Our calculations also showed that FCN isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

To most stock holders, hedge funds are perceived as underperforming, old financial tools of yesteryear. While there are greater than 8000 funds in operation at the moment, Our experts choose to focus on the leaders of this club, approximately 850 funds. These investment experts manage most of the hedge fund industry’s total capital, and by keeping an eye on their best equity investments, Insider Monkey has deciphered a few investment strategies that have historically defeated the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Christian Leone of Luxor Capital Group

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s view the fresh hedge fund action surrounding FTI Consulting, Inc. (NYSE:FCN).

How have hedgies been trading FTI Consulting, Inc. (NYSE:FCN)?

At Q1’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FCN over the last 18 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in FTI Consulting, Inc. (NYSE:FCN) was held by Greenvale Capital, which reported holding $47.9 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $27.8 million position. Other investors bullish on the company included AQR Capital Management, Shellback Capital, and Columbus Circle Investors. In terms of the portfolio weights assigned to each position Greenvale Capital allocated the biggest weight to FTI Consulting, Inc. (NYSE:FCN), around 12.59% of its 13F portfolio. Shellback Capital is also relatively very bullish on the stock, earmarking 4.04 percent of its 13F equity portfolio to FCN.

Seeing as FTI Consulting, Inc. (NYSE:FCN) has witnessed falling interest from the aggregate hedge fund industry, it’s safe to say that there is a sect of hedgies who sold off their positions entirely last quarter. It’s worth mentioning that Michael Kharitonov and Jon David McAuliffe’s Voleon Capital cut the biggest position of the 750 funds watched by Insider Monkey, valued at close to $1.3 million in stock, and Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors was right behind this move, as the fund dropped about $1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 2 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to FTI Consulting, Inc. (NYSE:FCN). We will take a look at Santander Consumer USA Holdings Inc (NYSE:SC), Nielsen Holdings plc (NYSE:NLSN), MKS Instruments, Inc. (NASDAQ:MKSI), and The Boston Beer Company Inc (NYSE:SAM). This group of stocks’ market caps are similar to FCN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SC 20 423643 -7
NLSN 33 762761 4
MKSI 27 296258 -1
SAM 24 557916 -2
Average 26 510145 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $510 million. That figure was $175 million in FCN’s case. Nielsen Holdings plc (NYSE:NLSN) is the most popular stock in this table. On the other hand Santander Consumer USA Holdings Inc (NYSE:SC) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks FTI Consulting, Inc. (NYSE:FCN) is even less popular than SC. Hedge funds dodged a bullet by taking a bearish stance towards FCN. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but managed to beat the market by 15.9 percentage points. Unfortunately FCN wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); FCN investors were disappointed as the stock returned -11.5% during the second quarter (through June 22nd) 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 so far in 2020.

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