Was The Smart Money Right About FleetCor Technologies (FLT)?

How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding FleetCor Technologies, Inc. (NYSE:FLT).

FleetCor Technologies, Inc. (NYSE:FLT) investors should be aware of an increase in support from the world’s most elite money managers recently. FleetCor Technologies, Inc. (NYSE:FLT) was in 44 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 60. There were 40 hedge funds in our database with FLT holdings at the end of September. Our calculations also showed that FLT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Andreas Halvorsen

Andreas Halvorsen of Viking Global

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s take a look at the new hedge fund action regarding FleetCor Technologies, Inc. (NYSE:FLT).

Do Hedge Funds Think FLT Is A Good Stock To Buy Now?

At fourth quarter’s end, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the third quarter of 2020. On the other hand, there were a total of 44 hedge funds with a bullish position in FLT a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is FLT A Good Stock To Buy?

Among these funds, Viking Global held the most valuable stake in FleetCor Technologies, Inc. (NYSE:FLT), which was worth $619.3 million at the end of the fourth quarter. On the second spot was Maverick Capital which amassed $267.2 million worth of shares. Steadfast Capital Management, Palestra Capital Management, and Tiger Global Management LLC 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 Incline Global Management allocated the biggest weight to FleetCor Technologies, Inc. (NYSE:FLT), around 7.6% of its 13F portfolio. Banbury Partners is also relatively very bullish on the stock, designating 7.2 percent of its 13F equity portfolio to FLT.

As one would reasonably expect, key hedge funds have jumped into FleetCor Technologies, Inc. (NYSE:FLT) headfirst. Renaissance Technologies, initiated the largest position in FleetCor Technologies, Inc. (NYSE:FLT). Renaissance Technologies had $20.4 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $6.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Victor Ho’s Yarra Square Partners, Allon Hellmann’s Full18 Capital, and Michael Gelband’s ExodusPoint Capital.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as FleetCor Technologies, Inc. (NYSE:FLT) but similarly valued. We will take a look at Coca-Cola European Partners plc (NYSE:CCEP), Viatris Inc. (NASDAQ:VTRS), MPLX LP (NYSE:MPLX), Deutsche Bank AG (NYSE:DB), Wayfair Inc (NYSE:W), Etsy Inc (NASDAQ:ETSY), and AvalonBay Communities Inc (NYSE:AVB). This group of stocks’ market values are closest to FLT’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CCEP 28 1003000 5
VTRS 67 2753638 19
MPLX 13 142057 -1
DB 16 1649538 1
W 40 2845135 0
ETSY 56 1963085 5
AVB 32 864498 3
Average 36 1602993 4.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $1603 million. That figure was $2030 million in FLT’s case. Viatris Inc. (NASDAQ:VTRS) is the most popular stock in this table. On the other hand MPLX LP (NYSE:MPLX) is the least popular one with only 13 bullish hedge fund positions. FleetCor Technologies, Inc. (NYSE:FLT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FLT is 59.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and beat the market again by 1.6 percentage points. Unfortunately FLT wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FLT were disappointed as the stock returned 5.5% since the end of December (through 4/30) 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 since 2019.

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