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Should You Buy TechnipFMC plc (FTI)?

With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was TechnipFMC plc (NYSE:FTI).

TechnipFMC plc (NYSE:FTI) investors should be aware of an increase in hedge fund interest lately. FTI was in 31 hedge funds’ portfolios at the end of the third quarter of 2019. There were 25 hedge funds in our database with FTI holdings at the end of the previous quarter. Our calculations also showed that FTI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Kerr Neilson of Platinum Asset Management

Kerr Neilson of Platinum Asset Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s check out the new hedge fund action surrounding TechnipFMC plc (NYSE:FTI).

What does smart money think about TechnipFMC plc (NYSE:FTI)?

At Q3’s end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 24% from one quarter earlier. By comparison, 23 hedge funds held shares or bullish call options in FTI a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

FTI_dec2019

Among these funds, Platinum Asset Management held the most valuable stake in TechnipFMC plc (NYSE:FTI), which was worth $209.2 million at the end of the third quarter. On the second spot was Pzena Investment Management which amassed $187.7 million worth of shares. Millennium Management, Balyasny Asset Management, and Citadel Investment Group 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 Platinum Asset Management allocated the biggest weight to TechnipFMC plc (NYSE:FTI), around 4.68% of its portfolio. SIR Capital Management is also relatively very bullish on the stock, designating 4.36 percent of its 13F equity portfolio to FTI.

As industrywide interest jumped, key money managers were breaking ground themselves. Encompass Capital Advisors, managed by Todd J. Kantor, established the largest position in TechnipFMC plc (NYSE:FTI). Encompass Capital Advisors had $25 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $21.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Peter Muller’s PDT Partners, Sara Nainzadeh’s Centenus Global Management, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as TechnipFMC plc (NYSE:FTI) but similarly valued. These stocks are SVB Financial Group (NASDAQ:SIVB), Aramark (NYSE:ARMK), Camden Property Trust (NYSE:CPT), and Noble Energy, Inc. (NYSE:NBL). This group of stocks’ market valuations resemble FTI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SIVB 39 597276 13
ARMK 35 1297465 -1
CPT 20 316246 1
NBL 28 602859 3
Average 30.5 703462 4

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.5 hedge funds with bullish positions and the average amount invested in these stocks was $703 million. That figure was $768 million in FTI’s case. SVB Financial Group (NASDAQ:SIVB) is the most popular stock in this table. On the other hand Camden Property Trust (NYSE:CPT) is the least popular one with only 20 bullish hedge fund positions. TechnipFMC plc (NYSE:FTI) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately FTI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on FTI were disappointed as the stock returned -21.5% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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

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