Fulton Financial Corp (FULT): Are Hedge Funds Right About This Stock?

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 5.2% over the 12-month period ending October 30, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored S&P 500 stocks by the hedge funds monitored by Insider Monkey (as of September 2014) generated a return of 9.5% over the same time span, with 63% of these stocks outperforming the benchmark. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Fulton Financial Corp (NASDAQ:FULT).

Fulton Financial Corp (NASDAQ:FULT) was in 11 hedge funds’ portfolios at the end of the third quarter of 2015. FULT investors should be aware of a decrease in enthusiasm from smart money in recent months. There were 19 hedge funds in our database with FULT holdings at the end of the previous quarter. At the end of this article we will also compare FULT to other stocks, including Northern Tier Energy LP (NYSE:NTI), Zynga Inc (NASDAQ:ZNGA), and Hancock Holding Company (NASDAQ:HBHC) to get a better sense of its popularity.

In the eyes of most shareholders, hedge funds are seen as worthless, old financial tools of years past. While there are over 8000 funds in operation today, Our researchers choose to focus on the masters of this group, about 700 funds. These investment experts handle the majority of all hedge funds’ total capital, and by following their first-class stock picks, Insider Monkey has spotted numerous investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

With all of this in mind, let’s check out the fresh action encompassing Fulton Financial Corp (NASDAQ:FULT).

What does the smart money think about Fulton Financial Corp (NASDAQ:FULT)?

Heading into Q4, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -42% from the second quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Millennium Management, managed by Israel Englander, holds the number one position in Fulton Financial Corp (NASDAQ:FULT). Millennium Management has a $16.9 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Dreman Value Management, managed by David Dreman, which holds a $12.4 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish include Cliff Asness’ AQR Capital Management, Ken Griffin’s Citadel Investment Group and Dmitry Balyasny’s Balyasny Asset Management.

Due to the fact that Fulton Financial Corp (NASDAQ:FULT) has experienced falling interest from the smart money, we can see that there lies a certain “tier” of fund managers that slashed their positions entirely last quarter. It’s worth mentioning that Sharif Siddiqui’s Alpenglow Capital dropped the largest investment of the “upper crust” of funds followed by Insider Monkey, worth an estimated $6.1 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also dumped its stock, about $1.5 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest was cut by 8 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Fulton Financial Corp (NASDAQ:FULT) but similarly valued. These stocks are Northern Tier Energy LP (NYSE:NTI), Zynga Inc (NASDAQ:ZNGA), Hancock Holding Company (NASDAQ:HBHC), and B&G Foods, Inc. (NYSE:BGS). This group of stocks’ market valuations are similar to FULT’s market valuation.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $206 million. That figure was just $74 million in FULT’s case. Zynga Inc (NASDAQ:ZNGA) is the most popular stock in this table, while Northern Tier Energy LP (NYSE:NTI) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Fulton Financial Corp (NASDAQ:FULT) is even less popular than NTI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.