Does New York Community Bancorp, Inc. (NYSE:NYCB) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.
New York Community Bancorp, Inc. (NYSE:NYCB) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 12 hedge funds’ portfolios at the end of the third quarter of 2018. At the end of this article we will also compare NYCB to other stocks including VEON Ltd. (NASDAQ:VEON), Ares Management L.P. (NYSE:ARES), and First Solar, Inc. (NASDAQ:FSLR) to get a better sense of its popularity.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a glance at the latest hedge fund action encompassing New York Community Bancorp, Inc. (NYSE:NYCB).
How are hedge funds trading New York Community Bancorp, Inc. (NYSE:NYCB)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, representing no change from the second quarter of 2018. By comparison, 21 hedge funds held shares or bullish call options in NYCB heading into this year. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Among these funds, Kahn Brothers held the most valuable stake in New York Community Bancorp, Inc. (NYSE:NYCB), which was worth $41 million at the end of the third quarter. On the second spot was Adage Capital Management which amassed $9.7 million worth of shares. Moreover, Lomas Capital Management, Renaissance Technologies, and Soros Fund Management were also bullish on New York Community Bancorp, Inc. (NYSE:NYCB), allocating a large percentage of their portfolios to this stock.
Because New York Community Bancorp, Inc. (NYSE:NYCB) has experienced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedgies who sold off their full holdings by the end of the third quarter. At the top of the heap, George Soros’s Soros Fund Management dropped the biggest stake of the “upper crust” of funds followed by Insider Monkey, valued at close to $7.8 million in stock, and Michael Platt and William Reeves’s BlueCrest Capital Mgmt. was right behind this move, as the fund said goodbye to about $1.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as New York Community Bancorp, Inc. (NYSE:NYCB) but similarly valued. These stocks are VEON Ltd. (NASDAQ:VEON), Ares Management Corporation (NYSE:ARES), First Solar, Inc. (NASDAQ:FSLR), and Royal Gold, Inc (NASDAQ:RGLD). This group of stocks’ market caps are similar to NYCB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VEON | 7 | 18060 | -3 |
| ARES | 15 | 305352 | 7 |
| FSLR | 14 | 294075 | -9 |
| RGLD | 17 | 78819 | -2 |
| Average | 13.25 | 174077 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $174 million. That figure was $66 million in NYCB’s case. Royal Gold, Inc (NASDAQ:RGLD) is the most popular stock in this table. On the other hand VEON Ltd. (NASDAQ:VEON) is the least popular one with only 7 bullish hedge fund positions. New York Community Bancorp, Inc. (NYSE:NYCB) 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 RGLD might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
