Is Formula One Group (FWONA) Going to Burn These Hedge Funds?

·5 min read

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Formula One Group (NASDAQ:FWONA).

Is Formula One Group (NASDAQ:FWONA) ready to rally soon? Money managers were taking an optimistic view. The number of bullish hedge fund positions rose by 3 recently. Formula One Group (NASDAQ:FWONA) was in 22 hedge funds' portfolios at the end of June. The all time high for this statistic is 28. Our calculations also showed that FWONA isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 19 hedge funds in our database with FWONA positions at the end of the first quarter.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover 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 EV 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. With all of this in mind we're going to check out the key hedge fund action encompassing Formula One Group (NASDAQ:FWONA).

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

At Q2's end, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 16% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FWONA over the last 24 quarters. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Is FWONA A Good Stock To Buy?
Is FWONA A Good Stock To Buy?

Among these funds, Ancient Art (Teton Capital) held the most valuable stake in Formula One Group (NASDAQ:FWONA), which was worth $103 million at the end of the second quarter. On the second spot was Ashe Capital which amassed $51 million worth of shares. Portsea Asset Management, Kontiki Capital, and CQS Cayman LP 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:FWONA), around 21.37% of its 13F portfolio. Ancient Art (Teton Capital) is also relatively very bullish on the stock, earmarking 9.63 percent of its 13F equity portfolio to FWONA.

Now, key hedge funds have jumped into Formula One Group (NASDAQ:FWONA) headfirst. Portsea Asset Management, managed by Cyrus de Weck, established the largest position in Formula One Group (NASDAQ:FWONA). Portsea Asset Management had $38.9 million invested in the company at the end of the quarter. Daniel S. Och's OZ Management also initiated a $13.3 million position during the quarter. The following funds were also among the new FWONA investors: Nathaniel August's Mangrove Partners, Crispin Odey's Odey Asset Management Group, and Bart Baum's Ionic Capital Management.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Formula One Group (NASDAQ:FWONA) but similarly valued. We will take a look at Amdocs Limited (NYSE:DOX), NRG Energy Inc (NYSE:NRG), MKS Instruments, Inc. (NASDAQ:MKSI), AGCO Corporation (NYSE:AGCO), Globe Life Inc. (NYSE:GL), Playtika Holding Corp. (NASDAQ:PLTK), and Appian Corporation (NASDAQ:APPN). This group of stocks' market values are closest to FWONA's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DOX,29,796947,-3 NRG,33,1905089,-2 MKSI,26,423293,4 AGCO,38,429223,2 GL,28,795034,-5 PLTK,26,463637,5 APPN,13,879312,-11 Average,27.6,813219,-1.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $813 million. That figure was $301 million in FWONA's case. AGCO Corporation (NYSE:AGCO) is the most popular stock in this table. On the other hand Appian Corporation (NASDAQ:APPN) is the least popular one with only 13 bullish hedge fund positions. Formula One Group (NASDAQ:FWONA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FWONA is 49.6. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on FWONA as the stock returned 19.9% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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