Before we spend days researching a stock idea we like to take a look at how hedge funds and billionaire investors recently traded that stock. Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of the third quarter of 2018. This means hedge funds that are allocating a higher percentage of their portfolio to small-cap stocks were probably underperforming the market. However, this also means that as small-cap stocks start to mean revert, these hedge funds will start delivering better returns than the S&P 500 Index funds. In this article, we will take a look at what hedge funds think about Fulton Financial Corp (NASDAQ:FULT).
Fulton Financial Corp (NASDAQ:FULT) investors should pay attention to a decrease in enthusiasm from smart money in recent months. Our calculations also showed that FULT isn’t among the 30 most popular stocks among hedge funds (view the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a glance at the recent hedge fund action regarding Fulton Financial Corp (NASDAQ:FULT).
How have hedgies been trading Fulton Financial Corp (NASDAQ:FULT)?
At Q2’s end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards FULT over the last 16 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Fulton Financial Corp (NASDAQ:FULT) was held by Winton Capital Management, which reported holding $7.8 million worth of stock at the end of March. It was followed by Millennium Management with a $6 million position. Other investors bullish on the company included Renaissance Technologies, Arrowstreet Capital, and Citadel Investment Group.
Seeing as Fulton Financial Corp (NASDAQ:FULT) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of funds that slashed their entire stakes by the end of the second quarter. At the top of the heap, Noam Gottesman’s GLG Partners dropped the largest investment of the 750 funds tracked by Insider Monkey, worth an estimated $0.5 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund said goodbye to about $0.5 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds by the end of the second quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Fulton Financial Corp (NASDAQ:FULT). These stocks are Energizer Holdings, Inc. (NYSE:ENR), Colliers International Group Inc (NASDAQ:CIGI), Immunomedics, Inc. (NASDAQ:IMMU), and Cedar Fair, L.P. (NYSE:FUN). All of these stocks’ market caps resemble FULT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENR | 17 | 230380 | -7 |
| CIGI | 10 | 714758 | -4 |
| IMMU | 21 | 618087 | -3 |
| FUN | 8 | 46860 | 0 |
| Average | 14 | 402521 | -3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $403 million. That figure was $35 million in FULT’s case. Immunomedics, Inc. (NASDAQ:IMMU) is the most popular stock in this table. On the other hand Cedar Fair, L.P. (NYSE:FUN) is the least popular one with only 8 bullish hedge fund positions. Fulton Financial Corp (NASDAQ:FULT) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately FULT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); FULT investors were disappointed as the stock returned -0.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
