In this article we will check out the progression of hedge fund sentiment towards Fluor Corporation (NYSE:FLR) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Fluor Corporation (NYSE:FLR) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 24 hedge funds’ portfolios at the end of March. 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 Norbord Inc. (NYSE:OSB), Black Stone Minerals LP (NYSE:BSM), and Callaway Golf Company (NYSE:ELY) to gather more data points. Our calculations also showed that FLR 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 shareholders, hedge funds are seen as underperforming, old investment vehicles of the past. While there are greater than 8000 funds in operation at present, Our experts look at the moguls of this club, approximately 850 funds. It is estimated that this group of investors control bulk of the smart money’s total capital, and by paying attention to their highest performing picks, Insider Monkey has deciphered various investment strategies that have historically exceeded the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year 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 .
Israel Englander of Millennium Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. 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. With all of this in mind let’s take a look at the key hedge fund action regarding Fluor Corporation (NYSE:FLR).
What does smart money think about Fluor Corporation (NYSE:FLR)?
At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FLR over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, D E Shaw held the most valuable stake in Fluor Corporation (NYSE:FLR), which was worth $24.1 million at the end of the third quarter. On the second spot was Empyrean Capital Partners which amassed $20.6 million worth of shares. Two Sigma Advisors, Newtyn Management, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Newtyn Management allocated the biggest weight to Fluor Corporation (NYSE:FLR), around 3.39% of its 13F portfolio. Empyrean Capital Partners is also relatively very bullish on the stock, dishing out 1.42 percent of its 13F equity portfolio to FLR.
Seeing as Fluor Corporation (NYSE:FLR) has experienced declining sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedge funds who sold off their positions entirely in the first quarter. Intriguingly, John W. Rogers’s Ariel Investments dumped the largest stake of all the hedgies tracked by Insider Monkey, comprising about $31.2 million in stock, and Clint Murray’s Lodge Hill Capital was right behind this move, as the fund dumped about $9.6 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to Fluor Corporation (NYSE:FLR). We will take a look at Norbord Inc. (NYSE:OSB), Black Stone Minerals LP (NYSE:BSM), Callaway Golf Company (NYSE:ELY), and OceanFirst Financial Corp. (NASDAQ:OCFC). This group of stocks’ market values are closest to FLR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| OSB | 12 | 19441 | -4 |
| BSM | 3 | 2190 | -1 |
| ELY | 23 | 120223 | 3 |
| OCFC | 9 | 28760 | -6 |
| Average | 11.75 | 42654 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $94 million in FLR’s case. Callaway Golf Company (NYSE:ELY) is the most popular stock in this table. On the other hand Black Stone Minerals LP (NYSE:BSM) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Fluor Corporation (NYSE:FLR) is more popular among hedge funds. 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 returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on FLR as the stock returned 92.5% so far in Q2 (through June 10th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
