Was The Smart Money Right About Formula One Group (FWONK)?

At Insider Monkey, we pore over the filings of nearly 887 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31st. In this article, we will use that wealth of knowledge to determine whether or not Formula One Group (NASDAQ:FWONK) makes for a good investment right now.

Formula One Group (NASDAQ:FWONK) has experienced an increase in support from the world’s most elite money managers lately. Formula One Group (NASDAQ:FWONK) was in 42 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 54. There were 40 hedge funds in our database with FWONK positions at the end of the third quarter. Our calculations also showed that FWONK isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Jeffrey Tannenbaum of Fir Tree

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. Keeping this in mind we’re going to take a peek at the key hedge fund action regarding Formula One Group (NASDAQ:FWONK).

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

At Q4’s end, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FWONK over the last 22 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

More specifically, OZ Management was the largest shareholder of Formula One Group (NASDAQ:FWONK), with a stake worth $309 million reported as of the end of December. Trailing OZ Management was Ashe Capital, which amassed a stake valued at $249.3 million. Eminence Capital, Citadel Investment Group, and Tremblant Capital 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 Portsea Asset Management allocated the biggest weight to Formula One Group (NASDAQ:FWONK), around 19.95% of its 13F portfolio. Kontiki Capital is also relatively very bullish on the stock, earmarking 16.48 percent of its 13F equity portfolio to FWONK.

Consequently, some big names were breaking ground themselves. Portsea Asset Management, managed by Cyrus de Weck, assembled the most valuable position in Formula One Group (NASDAQ:FWONK). Portsea Asset Management had $32.8 million invested in the company at the end of the quarter. Martin O’hare and Marcus Strub’s Fosse Capital Partners also made a $32 million investment in the stock during the quarter. The other funds with brand new FWONK positions are Stanley Druckenmiller’s Duquesne Capital, Jeffrey Tannenbaum’s Fir Tree, and Alexander Shapiro’s Anabranch Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Formula One Group (NASDAQ:FWONK) but similarly valued. These stocks are Camden Property Trust (NYSE:CPT), Lincoln National Corporation (NYSE:LNC), Trex Company, Inc. (NYSE:TREX), Floor & Decor Holdings, Inc. (NYSE:FND), Teck Resources Ltd (NYSE:TECK), BanColombia S.A. (NYSE:CIB), and American Airlines Group Inc (NASDAQ:AAL). All of these stocks’ market caps resemble FWONK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CPT 26 510604 1
LNC 36 708675 6
TREX 30 314067 4
FND 31 1027190 -11
TECK 31 798049 4
CIB 4 90995 1
AAL 37 329142 0
Average 27.9 539817 0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.9 hedge funds with bullish positions and the average amount invested in these stocks was $540 million. That figure was $1724 million in FWONK’s case. American Airlines Group Inc (NASDAQ:AAL) is the most popular stock in this table. On the other hand BanColombia S.A. (NYSE:CIB) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Formula One Group (NASDAQ:FWONK) is more popular among hedge funds. Our overall hedge fund sentiment score for FWONK is 80.3. 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. 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 still beat the market by 1.6 percentage points. Unfortunately FWONK wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FWONK were disappointed as the stock returned 10.2% since the end of the fourth quarter (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 most of these stocks already outperformed the market since 2019.

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