Is Flagstar Bancorp Inc (NYSE:FBC) a healthy stock for your portfolio? Hedge funds are becoming less hopeful. The number of long hedge fund positions shrunk by 3 in recent months.
If you’d ask most stock holders, hedge funds are perceived as underperforming, old financial vehicles of years past. While there are greater than 8000 funds with their doors open at present, we at Insider Monkey hone in on the bigwigs of this group, around 450 funds. Most estimates calculate that this group oversees the majority of the hedge fund industry’s total capital, and by tracking their top picks, we have uncovered a number of investment strategies that have historically beaten Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 23.3 percentage points in 8 months (see the details here).
Equally as beneficial, positive insider trading activity is another way to parse down the investments you’re interested in. There are a number of motivations for an insider to get rid of shares of his or her company, but only one, very clear reason why they would initiate a purchase. Various empirical studies have demonstrated the useful potential of this tactic if you understand what to do (learn more here).
Consequently, we’re going to take a gander at the latest action surrounding Flagstar Bancorp Inc (NYSE:FBC).
How have hedgies been trading Flagstar Bancorp Inc (NYSE:FBC)?
At Q1’s end, a total of 12 of the hedge funds we track held long positions in this stock, a change of -20% from one quarter earlier. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes considerably.
When looking at the hedgies we track, Geoffrey Raynor’s Q Investments (Specter Holdings) had the biggest position in Flagstar Bancorp Inc (NYSE:FBC), worth close to $18.8 million, accounting for 3% of its total 13F portfolio. Sitting at the No. 2 spot is D. E. Shaw of D E Shaw, with a $4.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other hedge funds with similar optimism include James Pallotta’s Raptor Capital Management, Glenn Russell Dubin’s Highbridge Capital Management and Mike Vranos’s Ellington.
Since Flagstar Bancorp Inc (NYSE:FBC) has witnessed falling interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of hedge funds who were dropping their entire stakes at the end of the first quarter. At the top of the heap, Joseph A. Jolson’s Harvest Capital Strategies sold off the biggest position of the 450+ funds we key on, totaling about $6 million in stock.. Timothy S. Peterson’s fund, Regiment Capital, also said goodbye to its stock, about $4.3 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 3 funds at the end of the first quarter.
What have insiders been doing with Flagstar Bancorp Inc (NYSE:FBC)?
Insider purchases made by high-level executives is most useful when the company in question has seen transactions within the past six months. Over the last half-year time period, Flagstar Bancorp Inc (NYSE:FBC) has experienced 1 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also examine hedge fund and insider activity in other stocks similar to Flagstar Bancorp Inc (NYSE:FBC). These stocks are Brookline Bancorp, Inc. (NASDAQ:BRKL), Berkshire Hills Bancorp, Inc. (NYSE:BHLB), Provident Financial Services, Inc. (NYSE:PFS), Kearny Financial Corp. (NASDAQ:KRNY), and Columbia Banking System Inc (NASDAQ:COLB). This group of stocks are in the savings & loans industry and their market caps resemble FBC’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Brookline Bancorp, Inc. (NASDAQ:BRKL) | 8 | 4 | 1 |
| Berkshire Hills Bancorp, Inc. (NYSE:BHLB) | 6 | 1 | 1 |
| Provident Financial Services, Inc. (NYSE:PFS) | 8 | 3 | 2 |
| Kearny Financial Corp. (NASDAQ:KRNY) | 5 | 0 | 3 |
| Columbia Banking System Inc (NASDAQ:COLB) | 9 | 0 | 2 |
With the returns shown by the aforementioned time-tested strategies, retail investors should always monitor hedge fund and insider trading sentiment, and Flagstar Bancorp Inc (NYSE:FBC) is no exception.
