Is Fifth Third Bancorp (FITB) A Good Stock To Buy?

Is Fifth Third Bancorp (NASDAQ:FITB) a good stock to buy right now? We at Insider Monkey like to examine what billionaires and hedge funds think of a company before doing days of research on it. Given their 2 and 20 payment structure, hedge funds have more resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also have numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Fifth Third Bancorp (NASDAQ:FITB) investors should be aware of a decrease in hedge fund interest recently. FITB was in 28 hedge funds’ portfolios at the end of the third quarter of 2015. There were 41 hedge funds in our database with FITB holdings at the end of the previous quarter. At the end of this article we will also compare FITB to other stocks, including Edwards Lifesciences Corp (NYSE:EW), Devon Energy Corp (NYSE:DVN), and Sprint Nextel Corporation (NYSE:S) to get a better sense of its popularity.

To the average investor, there are a lot of gauges market participants put to use to grade stocks. A duo of the most under-the-radar gauges are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can beat the broader indices by a superb margin (see the details here).

Keeping this in mind, let’s go over the new action encompassing Fifth Third Bancorp (NASDAQ:FITB).

What does the smart money think about Fifth Third Bancorp (NASDAQ:FITB)?

At Q3’s end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decrease of 32% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cliff Asness’s AQR Capital Management has the number one position in Fifth Third Bancorp (NASDAQ:FITB), worth close to $105.9 million, accounting for 0.2% of its total 13F portfolio. Coming in second is Pzena Investment Management, led by Richard S. Pzena, holding a $66.1 million stake; the fund has 0.4% of its 13F portfolio invested in the stock. Other professional money managers that are bullish include Israel Englander’s Millennium Management, Clint Carlson’s Carlson Capital and Patrik Brummer’s Zenit Asset Management AB.

Due to the fact that Fifth Third Bancorp (NASDAQ:FITB) has experienced falling interest from the smart money, it’s easy to see that there exists a select few funds that elected to cut their full holdings heading into Q4. Interestingly, Alan Howard’s Brevan Howard said goodbye to the biggest stake of the 700 funds tracked by Insider Monkey, comprising close to $13.9 million in stock. Phill Gross and Robert Atchinson’s fund, Adage Capital Management, also said goodbye to its stock, about $10.1 million worth of FITB shares. These transactions are interesting, as total hedge fund interest dropped by 13 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks similar to Fifth Third Bancorp (NASDAQ:FITB). We will take a look at Edwards Lifesciences Corp (NYSE:EW), Devon Energy Corp (NYSE:DVN), Sprint Nextel Corporation (NYSE:S), and Expedia Inc (NASDAQ:EXPE). All of these stocks’ market caps resemble FITB’s market cap.

As you can see these stocks had an average of 43 hedge funds with bullish positions and the average amount invested in these stocks was $1.85 million. The amount invested by hedge funds in FITB was just $440 million. Expedia Inc (NASDAQ:EXPE) is leading the pack, while Sprint Nextel Corporation (NYSE:S) is the least popular one with only 16 bullish hedge fund positions. Fifth Third Bancorp (NASDAQ:FITB) 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 EXPE might be a better candidate to consider a long position.