Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Fifth Third Bancorp (NASDAQ:FITB).
Is FITB stock a buy or sell? Fifth Third Bancorp (NASDAQ:FITB) shareholders have witnessed an increase in hedge fund sentiment of late. Fifth Third Bancorp (NASDAQ:FITB) was in 43 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 41. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that FITB 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.
Richard S. Pzena of Pzena Investment 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 10 best battery stocks to buy 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 we’re going to analyze the key hedge fund action surrounding Fifth Third Bancorp (NASDAQ:FITB).
Do Hedge Funds Think FITB Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of 43% from the third quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FITB over the last 22 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Fifth Third Bancorp (NASDAQ:FITB) was held by Citadel Investment Group, which reported holding $151.5 million worth of stock at the end of December. It was followed by Pzena Investment Management with a $56.2 million position. Other investors bullish on the company included Adage Capital Management, Millennium Management, and Holocene Advisors. 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 3.22% of its 13F portfolio. Hourglass Capital is also relatively very bullish on the stock, earmarking 2.93 percent of its 13F equity portfolio to FITB.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Renaissance Technologies, assembled the largest position in Fifth Third Bancorp (NASDAQ:FITB). Renaissance Technologies had $15.6 million invested in the company at the end of the quarter. William Harnisch’s Peconic Partners LLC also made a $6.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Ray Dalio’s Bridgewater Associates, Michael Gelband’s ExodusPoint Capital, and Ken Grossman and Glen Schneider’s SG Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Fifth Third Bancorp (NASDAQ:FITB) but similarly valued. We will take a look at BioNTech SE (NASDAQ:BNTX), International Paper Company (NYSE:IP), Northern Trust Corporation (NASDAQ:NTRS), Warner Music Group Corp. (NASDAQ:WMG), Ameren Corporation (NYSE:AEE), Rollins, Inc. (NYSE:ROL), and Teleflex Incorporated (NYSE:TFX). This group of stocks’ market valuations resemble FITB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BNTX | 17 | 170450 | 0 |
| IP | 31 | 167610 | -1 |
| NTRS | 31 | 388257 | 3 |
| WMG | 29 | 1021052 | 9 |
| AEE | 19 | 313397 | -1 |
| ROL | 28 | 644651 | -1 |
| TFX | 30 | 790658 | -10 |
| Average | 26.4 | 499439 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $499 million. That figure was $506 million in FITB’s case. International Paper Company (NYSE:IP) is the most popular stock in this table. On the other hand BioNTech SE (NASDAQ:BNTX) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Fifth Third Bancorp (NASDAQ:FITB) is more popular among hedge funds. Our overall hedge fund sentiment score for FITB is 90. 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 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 returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on FITB as the stock returned 39% since the end of December (through 3/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
