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Smart Money Is Losing Confidence in Fluor Corporation (NEW) (FLR)

Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Fluor Corporation (NEW) (NYSE:FLR) from the perspective of those elite funds.

Is Fluor Corporation (NEW) (NYSE:FLR) a buy right now? Prominent investors are taking a bearish view. The number of long hedge fund bets went down by 2 in recent months. At the end of this article we will also compare FLR to other stocks including The Goodyear Tire & Rubber Company (NASDAQ:GT), VimpelCom Ltd (ADR) (NYSE:VIP), and Turquoise Hill Resources Ltd (NYSE:TRQ) to get a better sense of its popularity.

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How have hedgies been trading Fluor Corporation (NEW) (NYSE:FLR)?

At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 8% from the previous quarter. While hedge fund ownership has trended down for 2 quarters, ownership has remained in a relatively narrow range for the past year. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Robert Bishop’s Impala Asset Management has the largest position in Fluor Corporation (NEW) (NYSE:FLR), worth close to $68.9 million, corresponding to 4.5% of its total 13F portfolio. The second largest stake is held by Cliff Asness of AQR Capital Management, with a $26.6 million position. Some other professional money managers with similar optimism comprise David Harding’s Winton Capital Management, Israel Englander’s Millennium Management and John W. Rogers’ Ariel Investments.

Due to the fact that Fluor Corporation (NEW) (NYSE:FLR) has faced falling interest from hedge fund managers, we can see that there lies a certain “tier” of money managers who were dropping their full holdings last quarter. Interestingly, Bruce Kovner’s Caxton Associates LP said goodbye to the largest position of the “upper crust” of funds tracked by Insider Monkey, totaling an estimated $19.5 million in call options, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund said goodbye to about $5.2 million worth of shares. These transactions are interesting, as aggregate hedge fund interest was cut by 2 funds last quarter.

Let’s also examine hedge fund activity in other stocks similar to Fluor Corporation (NEW) (NYSE:FLR). We will take a look at The Goodyear Tire & Rubber Company (NASDAQ:GT), VimpelCom Ltd (ADR) (NYSE:VIP), Turquoise Hill Resources Ltd (NYSE:TRQ), and EQT GP Holdings LP (NYSE:EQGP). This group of stocks’ market caps resemble FLR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GT 38 1712422 4
VIP 22 253443 12
TRQ 18 469171 -2
EQGP 3 24730 -1

As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $615 million. That figure was $226 million in FLR’s case. The Goodyear Tire & Rubber Company (NASDAQ:GT) is the most popular stock in this table. On the other hand EQT GP Holdings LP (NYSE:EQGP) is the least popular one with only 3 bullish hedge fund positions. Fluor Corporation (NEW) (NYSE:FLR) 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 GT might be a better candidate to consider a long position in.

Disclosure: None

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