Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Fifth Third Bancorp (NASDAQ:FITB).
Is FITB a good stock to buy? Fifth Third Bancorp (NASDAQ:FITB) investors should pay attention to a decrease in hedge fund interest lately. Fifth Third Bancorp (NASDAQ:FITB) was in 30 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 41. Our calculations also showed that FITB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.
Steven Cohen of Point72 Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 analyze the latest hedge fund action encompassing Fifth Third Bancorp (NASDAQ:FITB).
Do Hedge Funds Think FITB Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FITB over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the number one position in Fifth Third Bancorp (NASDAQ:FITB). Pzena Investment Management has a $56.1 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Ken Griffin of Citadel Investment Group, with a $54.2 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions include Brandon Haley’s Holocene Advisors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Dmitry Balyasny’s Balyasny Asset Management. In terms of the portfolio weights assigned to each position Elizabeth Park Capital Management allocated the biggest weight to Fifth Third Bancorp (NASDAQ:FITB), around 3.28% of its 13F portfolio. Hourglass Capital is also relatively very bullish on the stock, dishing out 2.75 percent of its 13F equity portfolio to FITB.
Since Fifth Third Bancorp (NASDAQ:FITB) has witnessed a decline in interest from the smart money, logic holds that there were a few money managers that decided to sell off their full holdings last quarter. Interestingly, Greg Eisner’s Engineers Gate Manager cut the largest stake of all the hedgies followed by Insider Monkey, totaling an estimated $1.8 million in stock, and Qing Li’s Sciencast Management was right behind this move, as the fund dumped about $1.6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Fifth Third Bancorp (NASDAQ:FITB). These stocks are Expeditors International of Washington (NASDAQ:EXPD), Ryanair Holdings plc (NASDAQ:RYAAY), Xylem Inc (NYSE:XYL), NVR, Inc. (NYSE:NVR), CarMax Inc (NYSE:KMX), Altice USA, Inc. (NYSE:ATUS), and Steris Plc (NYSE:STE). This group of stocks’ market caps are similar to FITB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EXPD | 31 | 528714 | -2 |
| RYAAY | 16 | 659788 | -5 |
| XYL | 21 | 592977 | -1 |
| NVR | 42 | 1141650 | 3 |
| KMX | 54 | 1449835 | 8 |
| ATUS | 62 | 3526439 | 5 |
| STE | 30 | 676397 | -10 |
| Average | 36.6 | 1225114 | -0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 36.6 hedge funds with bullish positions and the average amount invested in these stocks was $1225 million. That figure was $358 million in FITB’s case. Altice USA, Inc. (NYSE:ATUS) is the most popular stock in this table. On the other hand Ryanair Holdings plc (NASDAQ:RYAAY) 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. Our overall hedge fund sentiment score for FITB is 40.2. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. A small number of hedge funds were also right about betting on FITB as the stock returned 26.5% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
