Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Flagstar Bancorp Inc (NYSE:FBC) based on that data.
Is FBC stock a buy? Flagstar Bancorp Inc (NYSE:FBC) was in 28 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 25. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. FBC shareholders have witnessed an increase in support from the world’s most elite money managers recently. There were 25 hedge funds in our database with FBC holdings at the end of September. Our calculations also showed that FBC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Matthew Lindenbaum of Basswood Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s check out the new hedge fund action surrounding Flagstar Bancorp Inc (NYSE:FBC).
Do Hedge Funds Think FBC Is A Good Stock To Buy Now?
At the end of December, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FBC over the last 22 quarters. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
The largest stake in Flagstar Bancorp Inc (NYSE:FBC) was held by Basswood Capital, which reported holding $58.2 million worth of stock at the end of December. It was followed by Rubric Capital Management with a $30.8 million position. Other investors bullish on the company included Rima Senvest Management, Arrowstreet Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Basswood Capital allocated the biggest weight to Flagstar Bancorp Inc (NYSE:FBC), around 3.61% of its 13F portfolio. Rubric Capital Management is also relatively very bullish on the stock, designating 2.27 percent of its 13F equity portfolio to FBC.
As aggregate interest increased, key money managers have jumped into Flagstar Bancorp Inc (NYSE:FBC) headfirst. Rubric Capital Management, managed by David Rosen, created the most valuable position in Flagstar Bancorp Inc (NYSE:FBC). Rubric Capital Management had $30.8 million invested in the company at the end of the quarter. Richard Mashaal’s Rima Senvest Management also initiated a $30 million position during the quarter. The other funds with new positions in the stock are Mark Coe’s Intrinsic Edge Capital, Allon Hellmann’s Full18 Capital, and Gregg Moskowitz’s Interval Partners.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Flagstar Bancorp Inc (NYSE:FBC) but similarly valued. These stocks are Silk Road Medical, Inc. (NASDAQ:SILK), Main Street Capital Corporation (NYSE:MAIN), Gentherm Inc (NASDAQ:THRM), Grupo Financiero Galicia S.A. (NASDAQ:GGAL), Allegheny Technologies Incorporated (NYSE:ATI), CareTrust REIT Inc (NASDAQ:CTRE), and Purple Innovation, Inc. (NASDAQ:PRPL). This group of stocks’ market values are closest to FBC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SILK | 27 | 183660 | 7 |
| MAIN | 7 | 42787 | 3 |
| THRM | 13 | 111371 | 3 |
| GGAL | 8 | 14025 | 0 |
| ATI | 27 | 270725 | 9 |
| CTRE | 18 | 110980 | -1 |
| PRPL | 33 | 986317 | -3 |
| Average | 19 | 245695 | 2.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $246 million. That figure was $281 million in FBC’s case. Purple Innovation, Inc. (NASDAQ:PRPL) is the most popular stock in this table. On the other hand Main Street Capital Corporation (NYSE:MAIN) is the least popular one with only 7 bullish hedge fund positions. Flagstar Bancorp Inc (NYSE:FBC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FBC is 78.4. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and beat the market again by 0.9 percentage points. Unfortunately FBC wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on FBC were disappointed as the stock returned 8.5% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
