Were Hedge Funds Right About Flocking Into Four Corners Property Trust, Inc. (FCPT) ?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Four Corners Property Trust, Inc. (NYSE:FCPT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Four Corners Property Trust, Inc. (NYSE:FCPT) investors should be aware of an increase in activity from the world’s largest hedge funds of late. FCPT was in 21 hedge funds’ portfolios at the end of the second quarter of 2019. There were 13 hedge funds in our database with FCPT holdings at the end of the previous quarter. Our calculations also showed that FCPT isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Clint Carlson, Carlson Capital

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a gander at the recent hedge fund action surrounding Four Corners Property Trust, Inc. (NYSE:FCPT).

Hedge fund activity in Four Corners Property Trust, Inc. (NYSE:FCPT)

Heading into the third quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 62% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FCPT over the last 16 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with FCPT Positions

Among these funds, Carlson Capital held the most valuable stake in Four Corners Property Trust, Inc. (NYSE:FCPT), which was worth $27.8 million at the end of the second quarter. On the second spot was Millennium Management which amassed $20.6 million worth of shares. Moreover, Balyasny Asset Management, Echo Street Capital Management, and Waterfront Capital Partners were also bullish on Four Corners Property Trust, Inc. (NYSE:FCPT), allocating a large percentage of their portfolios to this stock.

Now, key money managers have been driving this bullishness. Echo Street Capital Management, managed by Greg Poole, created the largest position in Four Corners Property Trust, Inc. (NYSE:FCPT). Echo Street Capital Management had $12.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $6.3 million investment in the stock during the quarter. The following funds were also among the new FCPT investors: Ian Simm’s Impax Asset Management, Bruce Kovner’s Caxton Associates LP, and Benjamin A. Smith’s Laurion Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Four Corners Property Trust, Inc. (NYSE:FCPT) but similarly valued. We will take a look at Ameris Bancorp (NASDAQ:ABCB), Hostess Brands, Inc. (NASDAQ:TWNK), Genworth Financial Inc (NYSE:GNW), and Pretium Resources Inc (NYSE:PVG). This group of stocks’ market valuations match FCPT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ABCB 16 122661 -1
TWNK 26 282684 2
GNW 22 169662 -2
PVG 22 93797 1
Average 21.5 167201 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $167 million. That figure was $108 million in FCPT’s case. Hostess Brands, Inc. (NASDAQ:TWNK) is the most popular stock in this table. On the other hand Ameris Bancorp (NASDAQ:ABCB) is the least popular one with only 16 bullish hedge fund positions. Four Corners Property Trust, Inc. (NYSE:FCPT) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on FCPT, though not to the same extent, as the stock returned 4.5% during the third quarter and outperformed the market.

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