In this article we will analyze whether Flagstar Bancorp Inc (NYSE:FBC) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Flagstar Bancorp Inc (NYSE:FBC) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 25 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that FBC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare FBC to other stocks including Gentherm Inc (NASDAQ:THRM), Crescent Point Energy Corp (NYSE:CPG), and Lithium Americas Corp. (NYSE:LAC) to get a better sense of its popularity.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to check out the recent hedge fund action surrounding Flagstar Bancorp Inc (NYSE:FBC).
Joel Greenblatt of Gotham Asset Management
Do Hedge Funds Think FBC Is A Good Stock To Buy Now?
At Q3’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards FBC over the last 25 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Tudor Investment Corp was the largest shareholder of Flagstar Bancorp Inc (NYSE:FBC), with a stake worth $72 million reported as of the end of September. Trailing Tudor Investment Corp was Alpine Associates, which amassed a stake valued at $47.6 million. Arrowstreet Capital, Basswood Capital, and D E Shaw 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 Alpine Associates allocated the biggest weight to Flagstar Bancorp Inc (NYSE:FBC), around 1.54% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, earmarking 1.42 percent of its 13F equity portfolio to FBC.
Seeing as Flagstar Bancorp Inc (NYSE:FBC) has faced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedgies that slashed their entire stakes heading into Q4. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management cut the biggest stake of the “upper crust” of funds followed by Insider Monkey, comprising about $22.1 million in stock. Matthew Halbower’s fund, Pentwater Capital Management, also dumped its stock, about $1.7 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks similar to Flagstar Bancorp Inc (NYSE:FBC). We will take a look at Gentherm Inc (NASDAQ:THRM), Crescent Point Energy Corp (NYSE:CPG), Lithium Americas Corp. (NYSE:LAC), Covanta Holding Corporation (NYSE:CVA), Golub Capital BDC Inc (NASDAQ:GBDC), Central Garden & Pet Co (NASDAQ:CENT), and Energizer Holdings, Inc. (NYSE:ENR). This group of stocks’ market values resemble FBC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| THRM | 18 | 165695 | 0 |
| CPG | 11 | 108975 | -2 |
| LAC | 12 | 94159 | 3 |
| CVA | 23 | 437193 | -3 |
| GBDC | 11 | 55528 | -5 |
| CENT | 15 | 151237 | 3 |
| ENR | 16 | 187068 | -1 |
| Average | 15.1 | 171408 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $171 million. That figure was $296 million in FBC’s case. Covanta Holding Corporation (NYSE:CVA) is the most popular stock in this table. On the other hand Crescent Point Energy Corp (NYSE:CPG) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Flagstar Bancorp Inc (NYSE:FBC) is more popular among hedge funds. Our overall hedge fund sentiment score for FBC is 81.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Unfortunately FBC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FBC were disappointed as the stock returned -6.3% since the end of the third quarter (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
