We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional 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. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards F.N.B. Corp (NYSE:FNB) and determine whether hedge funds skillfully traded this stock.
F.N.B. Corp (NYSE:FNB) was in 24 hedge funds’ portfolios at the end of March. FNB shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. There were 23 hedge funds in our database with FNB holdings at the end of the previous quarter. Our calculations also showed that FNB isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
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 58 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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Matthew Lindenbaum of Basswood Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, on one site we found out that NBA champion Isiah Thomas is now the CEO of this cannabis company. The same site also talks about a snack manufacturer that’s growing at 30% annually. 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. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Keeping this in mind we’re going to check out the new hedge fund action encompassing F.N.B. Corp (NYSE:FNB).
How have hedgies been trading F.N.B. Corp (NYSE:FNB)?
At Q1’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in FNB over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in F.N.B. Corp (NYSE:FNB), which was worth $27.1 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $7.9 million worth of shares. D E Shaw, Basswood Capital, and EJF Capital 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 EJF Capital allocated the biggest weight to F.N.B. Corp (NYSE:FNB), around 0.98% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, setting aside 0.54 percent of its 13F equity portfolio to FNB.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. GLG Partners, managed by Noam Gottesman, assembled the biggest position in F.N.B. Corp (NYSE:FNB). GLG Partners had $1.9 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $1.1 million position during the quarter. The other funds with new positions in the stock are John Overdeck and David Siegel’s Two Sigma Advisors, Greg Eisner’s Engineers Gate Manager, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.
Let’s check out hedge fund activity in other stocks similar to F.N.B. Corp (NYSE:FNB). These stocks are Umpqua Holdings Corp (NASDAQ:UMPQ), TopBuild Corp (NYSE:BLD), LendingTree, Inc (NASDAQ:TREE), and Lattice Semiconductor Corporation (NASDAQ:LSCC). This group of stocks’ market values are closest to FNB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UMPQ | 23 | 183885 | 7 |
| BLD | 20 | 79991 | -9 |
| TREE | 21 | 74029 | -5 |
| LSCC | 26 | 531051 | -6 |
| Average | 22.5 | 217239 | -3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $217 million. That figure was $64 million in FNB’s case. Lattice Semiconductor Corporation (NASDAQ:LSCC) is the most popular stock in this table. On the other hand TopBuild Corp (NYSE:BLD) is the least popular one with only 20 bullish hedge fund positions. F.N.B. Corp (NYSE:FNB) is not the most popular stock in this group but hedge fund interest is still above average. 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 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately FNB wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FNB were disappointed as the stock returned 3.4% 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.
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Disclosure: None. This article was originally published at Insider Monkey.
