Hedge Funds Are Buying Financial Institutions, Inc. (FISI)

Is Financial Institutions, Inc. (NASDAQ:FISI) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is Financial Institutions, Inc. (NASDAQ:FISI) undervalued? Hedge funds are in an optimistic mood. The number of long hedge fund bets inched up by 1 in recent months. The shares of Financial Institutions, Inc witnessed a slightly negative momentum during the third quarter, declining 0.24% in value. We decided to find out more about the hedge funds holding stake in Financial Institutions, Inc. (NASDAQ:FISI) at the end of September.

The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Dynex Capital Inc (NYSE:DX), Boulevard Acquisition Corp li (NASDAQ:BLVDU), and Nobilis Health Corp (NYSEMKT:HLTH) to gather more data points.

To most traders, hedge funds are seen as slow, old investment tools of years past. While there are over 8000 funds with their doors open at the moment, We hone in on the elite of this club, around 700 funds. Most estimates calculate that this group of people direct most of the smart money’s total capital, and by keeping an eye on their top equity investments, Insider Monkey has brought to light many investment strategies that have historically outpaced Mr. Market. 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.

Keeping this in mind, let’s review the fresh action surrounding Financial Institutions, Inc. (NASDAQ:FISI).

What does the smart money think about Financial Institutions, Inc. (NASDAQ:FISI)?

Heading into Q4, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 20% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

Of the funds tracked by Insider Monkey, AlphaOne Capital Partners, managed by Paul Hondros, holds the most valuable position in Financial Institutions, Inc. (NASDAQ:FISI). AlphaOne Capital Partners has a $4.1 million position in the stock, comprising 1.7% of its 13F portfolio. Coming in second is Bryn Mawr Capital, managed by Ken Gray and Steve Walsh, which holds a $1.6 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining peers that hold long positions include Renaissance Technologies, Andy Redleaf’s Whitebox Advisors, and John Overdeck and David Siegel’s Two Sigma Advisors.

As one would reasonably expect, key money managers were leading the bulls’ herd. AlphaOne Capital Partners initiated the most outsized position in Financial Institutions, Inc. (NASDAQ:FISI). AlphaOne Capital Partners had $4.1 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.2 million position during the quarter.

Let’s check out hedge fund activity in other stocks similar to Financial Institutions, Inc. (NASDAQ:FISI). We will take a look at Dynex Capital Inc (NYSE:DX), Boulevard Acquisition Corp ll (NASDAQ:BLVDU), Nobilis Health Corp (NYSEMKT:HLTH), and Blackrock Corporate High Yield Fund Inc (NYSE:HYT). This group of stocks’ market values match Financial Institutions, Inc. (NASDAQ:FISI)’s market value.

As you can see, these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $69 million. That figure was $9 million in Financial Institutions, Inc. (NASDAQ:FISI)’s case. Boulevard Acquisition Corp li (NASDAQ:BLVDU) is the most popular stock in this table. On the other hand, Dynex Capital Inc (NYSE:DX) is the least popular one with only 5 bullish hedge fund positions. Financial Institutions, Inc. (NASDAQ:FISI) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Boulevard Acquisition Corp li (NASDAQ:BLVDU) might be a better candidate to consider a long position.