Don’t Buy Into FedEx Corporation (FDX). Here’s Why.
FedEx Corporation (NYSE:FDX) is up close to 20% year-to-date, though it has seen some analyst downgrades lately. Bears, here's more fuel to that fire.
At the moment, there are tons of indicators shareholders can use to monitor the equity markets. Two of the most under-the-radar are hedge fund and insider trading movement. At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the best money managers can beat their index-focused peers by a very impressive amount (see just how much).
Equally as key, positive insider trading activity is a second way to look at the investments you're interested in. As the old adage goes: there are lots of reasons for an executive to downsize shares of his or her company, but just one, very obvious reason why they would behave bullishly. Plenty of empirical studies have demonstrated the market-beating potential of this tactic if investors know where to look (learn more here).
What's more, it's important to study the recent info for FedEx Corporation (NYSE:FDX).
How have hedgies been trading FedEx Corporation (NYSE:FDX)?
In preparation for the third quarter, a total of 40 of the hedge funds we track held long positions in this stock, a change of -9% from the previous quarter. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their stakes considerably.
According to our 13F database, Mason Hawkins's Southeastern Asset Management had the largest position in FedEx Corporation (NYSE:FDX), worth close to $1.6014 billion, comprising 7.9% of its total 13F portfolio. Sitting at the No. 2 spot is Natixis Global Asset Management of Harris Associates, with a $1.3118 billion position; 2.8% of its 13F portfolio is allocated to the stock. Other hedgies that are bullish include Edgar Wachenheim's Greenhaven Associates, Richard Perry's Perry Capital and Michael Larson's Bill & Melinda Gates Foundation Trust.
Due to the fact FedEx Corporation (NYSE:FDX) has experienced dropping sentiment from the entirety of the hedge funds we track, we can see that there is a sect of hedgies who were dropping their entire stakes heading into Q2. At the top of the heap, Bain Capital's Brookside Capital said goodbye to the largest stake of all the hedgies we watch, worth close to $115.9 million in stock, and Donald Chiboucis of Columbus Circle Investors was right behind this move, as the fund dumped about $95.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 4 funds heading into Q2.
What do corporate executives and insiders think about FedEx Corporation (NYSE:FDX)?
Insider buying made by high-level executives is most useful when the company we're looking at has seen transactions within the past six months. Over the last 180-day time period, FedEx Corporation (NYSE:FDX) has seen zero unique insiders purchasing, and 10 insider sales (see the details of insider trades here).
We'll also take a look at the relationship between both of these indicators in other stocks similar to FedEx Corporation (NYSE:FDX). These stocks are Hub Group Inc (NASDAQ:HUBG), UTi Worldwide Inc. (NASDAQ:UTIW), Expeditors International of Washington (NASDAQ:EXPD), C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW), and United Parcel Service, Inc. (NYSE:UPS). All of these stocks are in the air delivery & freight services industry and their market caps resemble FDX's market cap.
# of Hedge Funds
# of Insiders Buying
# of Insiders Selling
Hub Group Inc (NASDAQ:HUBG)
UTi Worldwide Inc. (NASDAQ:UTIW)
Expeditors International of Washington (NASDAQ:EXPD)
C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW)
United Parcel Service, Inc. (NYSE:UPS)
Using the returns demonstrated by Insider Monkey's strategies, regular investors must always watch hedge fund and insider trading sentiment, and FedEx Corporation (NYSE:FDX) applies perfectly to this mantra.