Was The Smart Money Right About Five Point Holdings, LLC (FPH)?

Hedge funds don’t get the respect they used to get. Nowadays investors prefer passive funds over actively managed funds. One thing they don’t realize is that 100% of the passive funds didn’t see the coronavirus recession coming, but a lot of hedge funds did. Even we published an article near the end of February and predicted a US recession. Think about all the losses you could have avoided if you sold your shares in February and bought them back at the end of March. In this article we look at what those investors think of Five Point Holdings, LLC (NYSE:FPH).

Five Point Holdings, LLC (NYSE:FPH) was in 15 hedge funds’ portfolios at the end of December. FPH has experienced an increase in support from the world’s most elite money managers of late. There were 14 hedge funds in our database with FPH positions at the end of the previous quarter. Our calculations also showed that FPH isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

In today’s marketplace there are numerous formulas stock market investors have at their disposal to size up their holdings. Two of the best formulas are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can outperform the market by a solid margin (see the details here).


Paul Tudor Jones of Tudor Investment Corp

We leave no stone unturned when looking for the next great investment idea. For example, this investor can predict short term winners following earnings announcements with high accuracy, so we check out his stock picks. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a look at the latest hedge fund action surrounding Five Point Holdings, LLC (NYSE:FPH).

What does smart money think about Five Point Holdings, LLC (NYSE:FPH)?

At the end of the fourth quarter, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from the previous quarter. By comparison, 16 hedge funds held shares or bullish call options in FPH a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Five Point Holdings, LLC (NYSE:FPH) was held by Third Avenue Management, which reported holding $81.4 million worth of stock at the end of September. It was followed by Luxor Capital Group with a $47.7 million position. Other investors bullish on the company included Long Pond Capital, Glendon Capital Management, and Scoggin. In terms of the portfolio weights assigned to each position Third Avenue Management allocated the biggest weight to Five Point Holdings, LLC (NYSE:FPH), around 8.05% of its 13F portfolio. Scoggin is also relatively very bullish on the stock, setting aside 3.87 percent of its 13F equity portfolio to FPH.

As aggregate interest increased, key hedge funds were breaking ground themselves. D E Shaw, managed by D. E. Shaw, assembled the largest position in Five Point Holdings, LLC (NYSE:FPH). D E Shaw had $0.6 million invested in the company at the end of the quarter. John A. Levin’s Levin Capital Strategies also made a $0.5 million investment in the stock during the quarter. The only other fund with a new position in the stock is Paul Tudor Jones’s Tudor Investment Corp.

Let’s now take a look at hedge fund activity in other stocks similar to Five Point Holdings, LLC (NYSE:FPH). We will take a look at MAG Silver Corporation (NYSE:MAG), Bain Capital Specialty Finance, Inc. (NYSE:BCSF), RadNet Inc. (NASDAQ:RDNT), and Ebix Inc (NASDAQ:EBIX). This group of stocks’ market valuations are closest to FPH’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MAG 10 45280 -2
BCSF 8 40264 1
RDNT 14 74415 -2
EBIX 19 82096 1
Average 12.75 60514 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $61 million. That figure was $217 million in FPH’s case. Ebix Inc (NASDAQ:EBIX) is the most popular stock in this table. On the other hand Bain Capital Specialty Finance, Inc. (NYSE:BCSF) is the least popular one with only 8 bullish hedge fund positions. Five Point Holdings, LLC (NYSE:FPH) 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 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 1.0% in 2020 through May 1st but beat the market by 12.9 percentage points. Unfortunately FPH wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FPH were disappointed as the stock returned -19.7% during the same time period 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 many of these stocks already outperformed the market so far this year.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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