Is NYCB Stock A Buy or Sell?

With the fourth-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter of 2021. One of these stocks was New York Community Bancorp, Inc. (NYSE:NYCB).

Is NYCB stock a buy? New York Community Bancorp, Inc. (NYSE:NYCB) was in 25 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 28. NYCB investors should be aware of a decrease in support from the world’s most elite money managers in recent months. There were 28 hedge funds in our database with NYCB holdings at the end of September. Our calculations also showed that NYCB isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Today there are several formulas stock market investors employ to appraise their stock investments. A couple of the most underrated formulas are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can trounce the market by a healthy margin (see the details here).

Phillip Gross of Adage Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 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. Now we’re going to take a gander at the latest hedge fund action encompassing New York Community Bancorp, Inc. (NYSE:NYCB).

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

Heading into the first quarter of 2021, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the third quarter of 2020. On the other hand, there were a total of 27 hedge funds with a bullish position in NYCB a year ago. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

Among these funds, Adage Capital Management held the most valuable stake in New York Community Bancorp, Inc. (NYSE:NYCB), which was worth $62.7 million at the end of the fourth quarter. On the second spot was Kahn Brothers which amassed $45.5 million worth of shares. Arrowstreet Capital, Holocene Advisors, and D E Shaw 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 7.94% of its 13F portfolio. Full18 Capital is also relatively very bullish on the stock, dishing out 0.85 percent of its 13F equity portfolio to NYCB.

Due to the fact that New York Community Bancorp, Inc. (NYSE:NYCB) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of fund managers that elected to cut their positions entirely by the end of the fourth quarter. It’s worth mentioning that John Overdeck and David Siegel’s Two Sigma Advisors said goodbye to the largest investment of the “upper crust” of funds followed by Insider Monkey, comprising an estimated $3.2 million in stock. Donald Sussman’s fund, Paloma Partners, also cut its stock, about $2 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 3 funds by the end of the fourth quarter.

Let’s check out 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 Pinnacle Financial Partners, Inc. (NASDAQ:PNFP), Virtu Financial Inc (NASDAQ:VIRT), Allison Transmission Holdings Inc (NYSE:ALSN), Essent Group Ltd (NYSE:ESNT), Pacific Biosciences of California, Inc. (NASDAQ:PACB), LiveRamp Holdings, Inc. (NYSE:RAMP), and IDACORP Inc (NYSE:IDA). This group of stocks’ market caps are closest to NYCB’s market cap.

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As you can see these stocks had an average of 22.6 hedge funds with bullish positions and the average amount invested in these stocks was $443 million. That figure was $244 million in NYCB’s case. Essent Group Ltd (NYSE:ESNT) is the most popular stock in this table. On the other hand Pinnacle Financial Partners, Inc. (NASDAQ:PNFP) is the least popular one with only 13 bullish hedge fund positions. New York Community Bancorp, Inc. (NYSE:NYCB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for NYCB is 60.4. 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 gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on NYCB as the stock returned 18% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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