Is New York Community Bancorp, Inc. (NYCB) Going to Burn These Hedge Funds?

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding New York Community Bancorp, Inc. (NYSE:NYCB).

Is New York Community Bancorp, Inc. (NYSE:NYCB) undervalued? Money managers were cutting their exposure. The number of long hedge fund bets retreated by 3 lately. New York Community Bancorp, Inc. (NYSE:NYCB) was in 27 hedge funds’ portfolios at the end of September. The all time high for this statistic is 30. Our calculations also showed that NYCB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 30 hedge funds in our database with NYCB positions at the end of the second quarter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now let’s view the key hedge fund action surrounding New York Community Bancorp, Inc. (NYSE:NYCB).

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

Do Hedge Funds Think NYCB Is A Good Stock To Buy Now?

At the end of September, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards NYCB over the last 25 quarters. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Among these funds, Balyasny Asset Management held the most valuable stake in New York Community Bancorp, Inc. (NYSE:NYCB), which was worth $92.7 million at the end of the third quarter. On the second spot was Schonfeld Strategic Advisors which amassed $66.7 million worth of shares. Kahn Brothers, Arrowstreet Capital, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Kahn Brothers allocated the biggest weight to New York Community Bancorp, Inc. (NYSE:NYCB), around 8.69% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, dishing out 1.99 percent of its 13F equity portfolio to NYCB.

Because New York Community Bancorp, Inc. (NYSE:NYCB) has witnessed bearish sentiment from the smart money, logic holds that there were a few fund managers that slashed their entire stakes last quarter. Intriguingly, Noam Gottesman’s GLG Partners sold off the biggest position of all the hedgies monitored by Insider Monkey, totaling an estimated $6.2 million in stock. Paul Tudor Jones’s fund, Tudor Investment Corp, also sold off its stock, about $5.4 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 3 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as New York Community Bancorp, Inc. (NYSE:NYCB) but similarly valued. These stocks are FIGS Inc. (NYSE:FIGS), Leggett & Platt, Inc. (NYSE:LEG), Power Integrations Inc (NASDAQ:POWI), Ingredion Incorporated (NYSE:INGR), Red Rock Resorts, Inc. (NASDAQ:RRR), MicroStrategy Incorporated (NASDAQ:MSTR), and United States Steel Corporation (NYSE:X). This group of stocks’ market valuations resemble NYCB’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.3 hedge funds with bullish positions and the average amount invested in these stocks was $380 million. That figure was $483 million in NYCB’s case. Red Rock Resorts, Inc. (NASDAQ:RRR) is the most popular stock in this table. On the other hand Leggett & Platt, Inc. (NYSE:LEG) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks New York Community Bancorp, Inc. (NYSE:NYCB) is more popular among hedge funds. Our overall hedge fund sentiment score for NYCB is 79. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Unfortunately NYCB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on NYCB were disappointed as the stock returned -3.5% since the end of the third quarter (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.