In this article you are going to find out whether hedge funds think Formula One Group (NASDAQ:FWONK) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is Formula One (FWONK) stock a buy or sell? The best stock pickers were taking a bullish view. The number of bullish hedge fund bets increased by 2 recently. 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. Our calculations also showed that FWONK isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 40 hedge funds in our database with FWONK holdings at the end of September.
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 was 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).
Ricky Sandler of Eminence Capital
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Do Hedge Funds Think FWONK Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 42 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in FWONK over the last 22 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Daniel S. Och’s OZ Management has the most valuable position in Formula One Group (NASDAQ:FWONK), worth close to $309 million, corresponding to 1.3% of its total 13F portfolio. The second most bullish fund manager is Ashe Capital, managed by William Crowley, William Harker, and Stephen Blass, which holds a $249.3 million position; 15.6% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism consist of Ricky Sandler’s Eminence Capital, Ken Griffin’s Citadel Investment Group and Brett Barakett’s Tremblant Capital. 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, setting aside 16.48 percent of its 13F equity portfolio to FWONK.
As industrywide interest jumped, key money managers were breaking ground themselves. Portsea Asset Management, managed by Cyrus de Weck, assembled the most outsized 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 initiated a $32 million position during the quarter. The other funds with new positions in the stock are Stanley Druckenmiller’s Duquesne Capital, Jeffrey Tannenbaum’s Fir Tree, and Alexander Shapiro’s Anabranch Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Formula One Group (NASDAQ:FWONK) but similarly valued. We will take a look at 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). This group of stocks’ market valuations resemble FWONK’s market valuation.
[table] 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 [/table]
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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on FWONK as the stock returned 8.9% since the end of December (through 3/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.