Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETF by 4 percentage points so far this year. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at New York Community Bancorp, Inc. (NYSE:NYCB) from the perspective of those elite funds.
Is New York Community Bancorp, Inc. (NYSE:NYCB) a buy, sell, or hold? The smart money is becoming more confident. The number of bullish hedge fund positions went up by 7 recently. Our calculations also showed that NYCB isn’t among the 30 most popular stocks among hedge funds (view the video below). NYCB was in 19 hedge funds’ portfolios at the end of the second quarter of 2019. There were 12 hedge funds in our database with NYCB positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the new hedge fund action encompassing New York Community Bancorp, Inc. (NYSE:NYCB).
How have hedgies been trading New York Community Bancorp, Inc. (NYSE:NYCB)?
At the end of the second quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 58% from the first quarter of 2019. By comparison, 12 hedge funds held shares or bullish call options in NYCB a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Irving Kahn’s Kahn Brothers has the number one position in New York Community Bancorp, Inc. (NYSE:NYCB), worth close to $54.6 million, amounting to 6.8% of its total 13F portfolio. The second most bullish fund manager is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $37.5 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism encompass Renaissance Technologies, Ken Griffin’s Citadel Investment Group and Phill Gross and Robert Atchinson’s Adage Capital Management.
As industrywide interest jumped, specific money managers have been driving this bullishness. Kahn Brothers, managed by Irving Kahn, initiated the most outsized position in New York Community Bancorp, Inc. (NYSE:NYCB). Kahn Brothers had $54.6 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $37.5 million investment in the stock during the quarter. The other funds with brand new NYCB positions are D. E. Shaw’s D E Shaw, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s now review 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 The Macerich Company (NYSE:MAC), Nuance Communications Inc. (NASDAQ:NUAN), Prosperity Bancshares, Inc. (NYSE:PB), and Calgon Carbon Corporation (NYSE:CCC). This group of stocks’ market values match NYCB’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MAC | 21 | 288149 | -1 |
| NUAN | 28 | 529243 | 0 |
| PB | 16 | 107741 | 7 |
| CCC | 21 | 437169 | -1 |
| Average | 21.5 | 340576 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $341 million. That figure was $194 million in NYCB’s case. Nuance Communications Inc. (NASDAQ:NUAN) is the most popular stock in this table. On the other hand Prosperity Bancshares, Inc. (NYSE:PB) is the least popular one with only 16 bullish hedge fund positions. New York Community Bancorp, Inc. (NYSE:NYCB) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on NYCB as the stock returned 27.6% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
