After several tireless days we have finished crunching the numbers from the more than 700 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards First Republic Bank (NYSE:FRC).
First Republic Bank (NYSE:FRC) investors should be aware of a decrease in activity from the world’s largest hedge funds of late. At the end of this article we will also compare FRC to other stocks including UDR, Inc. (NYSE:UDR), Expeditors International of Washington (NASDAQ:EXPD), and Cheniere Energy Partners LP (NYSEAMEX:CQP) to get a better sense of its popularity.
Follow First Republic Bank S F New (NYSE:FRC)
Follow First Republic Bank S F New (NYSE:FRC)
If you’d ask most market participants, hedge funds are perceived as unimportant, outdated investment tools of the past. While there are over 8,000 funds in operation today, our experts look at the crème de la crème of this club, around 700 funds. These hedge fund managers watch over bulk of all hedge funds’ total asset base, and by tracking their finest picks, Insider Monkey has discovered a number of investment strategies that have historically outperformed Mr. Market. Insider Monkey’s small-cap hedge fund strategy defeated the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
With all of this in mind, let’s analyze the latest action surrounding First Republic Bank (NYSE:FRC).
How are hedge funds trading First Republic Bank (NYSE:FRC)?
At the end of the third quarter, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund holdings data compiled by Insider Monkey, Robert Joseph Caruso’s Select Equity Group had the largest position in First Republic Bank (NYSE:FRC), worth close to $224.5 million, amounting to 2.1% of its total 13F portfolio. The second largest stake is held by Fisher Asset Management, led by Ken Fisher, holding a $26.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other peers with similar optimism include D. E. Shaw’s D E Shaw, Malcolm Fairbairn’s Ascend Capital and Charles Clough’s Clough Capital Partners.
Because First Republic Bank (NYSE:FRC) has faced a declination in interest from the smart money, logic holds that there were a few hedgies that slashed their positions entirely heading into Q4. Intriguingly, Israel Englander’s Millennium Management said goodbye to the largest stake of the “upper crust” of funds tracked by Insider Monkey, comprising close to $6 million in stock, and Dmitry Balyasny of Balyasny Asset Management was right behind this move, as the fund cut about $4.3 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 7 funds heading into Q4.
Let’s now review hedge fund activity in other stocks similar to First Republic Bank (NYSE:FRC). These stocks are UDR, Inc. (NYSE:UDR), Expeditors International of Washington (NASDAQ:EXPD), Cheniere Energy Partners LP (NYSEAMEX:CQP), and Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP). This group of stocks’ market caps resemble FRC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UDR | 9 | 45140 | -3 |
| EXPD | 25 | 731428 | -6 |
| CQP | 8 | 30292 | 1 |
| CTRP | 43 | 2075926 | -9 |
As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $721 million.That figure was $362 millions in FRC’s case. Ctrip.com International, Ltd. (ADR) (NASDAQ:CTRP) is the most popular stock in this table. On the other hand Cheniere Energy Partners LP (NYSEAMEX:CQP) is the least popular one with only 8 bullish hedge fund positions. First Republic Bank (NYSE:FRC) 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 CTRP might be a better candidate to consider a long position.
