Is First Financial Bankshares Inc (NASDAQ:FFIN) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to find the winners in the stock market.
First Financial Bankshares Inc (NASDAQ:FFIN) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of December. At the end of this article we will also compare FFIN to other stocks including Insperity Inc (NYSE:NSP), Flowers Foods, Inc. (NYSE:FLO), and Grupo Financiero Galicia S.A. (NASDAQ:GGAL) to get a better sense of its popularity.
If you’d ask most market participants, hedge funds are seen as unimportant, old financial tools of years past. While there are over 8000 funds with their doors open today, Our experts look at the moguls of this group, approximately 750 funds. Most estimates calculate that this group of people preside over bulk of all hedge funds’ total capital, and by keeping an eye on their matchless stock picks, Insider Monkey has deciphered many investment strategies that have historically defeated the market. Insider Monkey’s flagship hedge fund strategy surpassed the S&P 500 index by nearly 5 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 27.5% since February 2017 (through March 12th) even though the market was up nearly 25% during the same period. We just shared a list of 6 short targets in our latest quarterly update and they are already down an average of 6% in less than a month.
Let’s take a gander at the key hedge fund action regarding First Financial Bankshares Inc (NASDAQ:FFIN).
What does the smart money think about First Financial Bankshares Inc (NASDAQ:FFIN)?
Heading into the first quarter of 2019, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in FFIN over the last 14 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, PEAK6 Capital Management was the largest shareholder of First Financial Bankshares Inc (NASDAQ:FFIN), with a stake worth $6.6 million reported as of the end of September. Trailing PEAK6 Capital Management was Balyasny Asset Management, which amassed a stake valued at $4.2 million. AQR Capital Management, Renaissance Technologies, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as First Financial Bankshares Inc (NASDAQ:FFIN) has witnessed falling interest from the smart money, logic holds that there lies a certain “tier” of funds who sold off their entire stakes in the third quarter. Interestingly, Noam Gottesman’s GLG Partners said goodbye to the largest position of all the hedgies watched by Insider Monkey, comprising close to $0.7 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund dropped about $0.6 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to First Financial Bankshares Inc (NASDAQ:FFIN). These stocks are Insperity Inc (NYSE:NSP), Flowers Foods, Inc. (NYSE:FLO), Grupo Financiero Galicia S.A. (NASDAQ:GGAL), and EnLink Midstream Partners LP (NYSE:ENLK). This group of stocks’ market values match FFIN’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NSP | 24 | 262674 | 8 |
| FLO | 20 | 196727 | 0 |
| GGAL | 19 | 133358 | 4 |
| ENLK | 6 | 18606 | 2 |
| Average | 17.25 | 152841 | 3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $153 million. That figure was $6 million in FFIN’s case. Insperity Inc (NYSE:NSP) is the most popular stock in this table. On the other hand EnLink Midstream Partners LP (NYSE:ENLK) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks First Financial Bankshares Inc (NASDAQ:FFIN) is even less popular than ENLK. Hedge funds dodged a bullet by taking a bearish stance towards FFIN. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately FFIN wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); FFIN investors were disappointed as the stock returned 4% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
