Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Fidelity National Information Services Inc. (NYSE:FIS) based on that data and determine whether they were really smart about the stock.
Is Fidelity National Information Services Inc. (NYSE:FIS) a bargain? Hedge funds were buying. The number of long hedge fund bets improved by 6 recently. Our calculations also showed that FIS ranked #15 among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). Fidelity National Information Services Inc. (NYSE:FIS) was in 111 hedge funds' portfolios at the end of June. The all time high for this statistics was 105 previously. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 105 hedge funds in our database with FIS positions at the end of the previous quarter.
Video: 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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Dan Loeb THIRD POINT
Dan Loeb of Third Point
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out ideas like this under-the-radar stock to identify the next tenbagger. Currently, investors are pessimistic about commercial real estate investments. So, we are checking out this contrarian play to diversify our market exposure. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Keeping this in mind we're going to go over the key hedge fund action surrounding Fidelity National Information Services Inc. (NYSE:FIS).
Hedge fund activity in Fidelity National Information Services Inc. (NYSE:FIS)
At second quarter's end, a total of 111 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FIS over the last 20 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
According to Insider Monkey's hedge fund database, Viking Global, managed by Andreas Halvorsen, holds the biggest position in Fidelity National Information Services Inc. (NYSE:FIS). Viking Global has a $900.3 million position in the stock, comprising 3.9% of its 13F portfolio. Coming in second is William von Mueffling of Cantillon Capital Management, with a $548.9 million position; 4.8% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism encompass Daniel Sundheim's D1 Capital Partners, Farallon Capital and Dan Loeb's Third Point. In terms of the portfolio weights assigned to each position BlueSpruce Investments allocated the biggest weight to Fidelity National Information Services Inc. (NYSE:FIS), around 11.26% of its 13F portfolio. Atalan Capital is also relatively very bullish on the stock, setting aside 11.02 percent of its 13F equity portfolio to FIS.
Consequently, some big names were leading the bulls' herd. MIG Capital, managed by Richard Merage, initiated the most outsized position in Fidelity National Information Services Inc. (NYSE:FIS). MIG Capital had $32 million invested in the company at the end of the quarter. Doug Gordon, Jon Hilsabeck and Don Jabro's Shellback Capital also initiated a $31.2 million position during the quarter. The other funds with new positions in the stock are Peter S. Park's Park West Asset Management, David Fiszel's Honeycomb Asset Management, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Fidelity National Information Services Inc. (NYSE:FIS) but similarly valued. We will take a look at Diageo plc (NYSE:DEO), Sony Corporation (NYSE:SNE), T-Mobile US, Inc. (NASDAQ:TMUS), Altria Group Inc (NYSE:MO), Mondelez International Inc (NASDAQ:MDLZ), HDFC Bank Limited (NYSE:HDB), and General Electric Company (NYSE:GE). This group of stocks' market valuations resemble FIS's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DEO,20,653839,3 SNE,28,598881,0 TMUS,113,7158311,48 MO,43,1289543,-3 MDLZ,54,2594722,0 HDB,42,1177218,4 GE,57,3186232,-1 Average,51,2379821,7.3 [/table]
As you can see these stocks had an average of 51 hedge funds with bullish positions and the average amount invested in these stocks was $2.4 billion. That figure was $8.2 billion in FIS's case. T-Mobile US, Inc. (NASDAQ:TMUS) is the most popular stock in this table. On the other hand Diageo plc (NYSE:DEO) is the least popular one with only 20 bullish hedge fund positions. Fidelity National Information Services Inc. (NYSE:FIS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FIS is 93. 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 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 28.2% in 2020 through August 24th but beat the market by 20.6 percentage points. Unfortunately FIS wasn't nearly as popular as these 10 stocks and hedge funds that were betting on FIS were disappointed as the stock returned 5.7% during the same time period 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 so far this year.
