We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Peltz's recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Four Corners Property Trust, Inc. (NYSE:FCPT).
Is FCPT a good stock to buy now? Four Corners Property Trust, Inc. (NYSE:FCPT) was in 13 hedge funds' portfolios at the end of September. The all time high for this statistic is 25. FCPT shareholders have witnessed a decrease in activity from the world's largest hedge funds in recent months. There were 19 hedge funds in our database with FCPT positions at the end of the second quarter. Our calculations also showed that FCPT isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most traders, hedge funds are seen as slow, outdated investment tools of yesteryear. While there are over 8000 funds trading at present, Our experts hone in on the upper echelon of this group, approximately 850 funds. It is estimated that this group of investors direct the majority of all hedge funds' total capital, and by shadowing their finest equity investments, Insider Monkey has spotted a number of investment strategies that have historically beaten the S&P 500 index. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Michael Gelband of ExodusPoint Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let's analyze the fresh hedge fund action regarding Four Corners Property Trust, Inc. (NYSE:FCPT).
Do Hedge Funds Think FCPT Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -32% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FCPT over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Millennium Management held the most valuable stake in Four Corners Property Trust, Inc. (NYSE:FCPT), which was worth $18 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $16.8 million worth of shares. Citadel Investment Group, Soapstone Capital, and D E Shaw 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 Soapstone Capital allocated the biggest weight to Four Corners Property Trust, Inc. (NYSE:FCPT), around 4.08% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, earmarking 0.58 percent of its 13F equity portfolio to FCPT.
Seeing as Four Corners Property Trust, Inc. (NYSE:FCPT) has faced falling interest from hedge fund managers, we can see that there is a sect of money managers that decided to sell off their full holdings in the third quarter. It's worth mentioning that Eduardo Abush's Waterfront Capital Partners sold off the largest stake of all the hedgies followed by Insider Monkey, worth an estimated $16.1 million in stock. James Morrow's fund, Callodine Capital Management, also cut its stock, about $6.1 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 6 funds in the third quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Four Corners Property Trust, Inc. (NYSE:FCPT) but similarly valued. These stocks are Coeur Mining, Inc. (NYSE:CDE), Jack in the Box Inc. (NASDAQ:JACK), Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB), Cerence Inc. (NASDAQ:CRNC), Assured Guaranty Ltd. (NYSE:AGO), AtriCure Inc. (NASDAQ:ATRC), and The Goodyear Tire & Rubber Company (NASDAQ:GT). This group of stocks' market values are closest to FCPT's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CDE,15,44740,1 JACK,38,314788,7 OMAB,7,28689,3 CRNC,12,135180,-2 AGO,27,205479,2 ATRC,21,224194,-2 GT,24,166177,3 Average,20.6,159892,1.7 [/table]
As you can see these stocks had an average of 20.6 hedge funds with bullish positions and the average amount invested in these stocks was $160 million. That figure was $67 million in FCPT's case. Jack in the Box Inc. (NASDAQ:JACK) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Centro Norte, S.A.B. de C.V. (NASDAQ:OMAB) is the least popular one with only 7 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 overall hedge fund sentiment score for FCPT is 24.3. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on FCPT as the stock returned 13.1% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
