First Financial Bancorp (FFBC): Are Hedge Funds Right About This Stock?

Is First Financial Bancorp (NASDAQ:FFBC) a bargain? The best stock pickers are becoming less confident. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience

To most stock holders, hedge funds are seen as worthless, old investment vehicles of years past. While there are greater than 8000 funds with their doors open at present, we hone in on the upper echelon of this club, about 450 funds. It is widely believed that this group controls the majority of the smart money’s total capital, and by watching their top investments, we have formulated a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as integral, optimistic insider trading sentiment is a second way to break down the stock market universe. Obviously, there are lots of incentives for a bullish insider to downsize shares of his or her company, but just one, very simple reason why they would buy. Plenty of academic studies have demonstrated the useful potential of this strategy if “monkeys” know where to look (learn more here).

With all of this in mind, let’s take a look at the recent action surrounding First Financial Bancorp (NASDAQ:FFBC).

What have hedge funds been doing with First Financial Bancorp (NASDAQ:FFBC)?

In preparation for this quarter, a total of 5 of the hedge funds we track were bullish in this stock, a change of 0% from one quarter earlier. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes significantly.

When looking at the hedgies we track, Ken Griffin’s Citadel Investment Group had the biggest position in First Financial Bancorp (NASDAQ:FFBC), worth close to $1.8 million, accounting for less than 0.1%% of its total 13F portfolio. Coming in second is AQR Capital Management, managed by Cliff Asness, which held a $1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other peers that are bullish include Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors and Mike Vranos’s Ellington.

Due to the fact that First Financial Bancorp (NASDAQ:FFBC) has faced bearish sentiment from hedge fund managers, it’s easy to see that there were a few hedgies that decided to sell off their positions entirely in Q1. It’s worth mentioning that Paul Tudor Jones’s Tudor Investment Corp said goodbye to the largest investment of the 450+ funds we key on, totaling an estimated $0.4 million in stock., and David Costen Haley of HBK Investments was right behind this move, as the fund dumped about $0.2 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in First Financial Bancorp (NASDAQ:FFBC)

Bullish insider trading is most useful when the company in question has seen transactions within the past 180 days. Over the latest 180-day time frame, First Financial Bancorp (NASDAQ:FFBC) has experienced 9 unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to First Financial Bancorp (NASDAQ:FFBC). These stocks are Chemical Financial Corporation (NASDAQ:CHFC), Park National Corporation (NYSEAMEX:PRK), First Midwest Bancorp Inc (NASDAQ:FMBI), National Bank Holdings Corp (NYSE:NBHC), and Citizens Republic Bancorp Inc (NASDAQ:CRBC). This group of stocks are in the regional – midwest banks industry and their market caps resemble FFBC’s market cap.