Where Do Hedge Funds Stand On Fifth Third Bancorp (FITB)?

In this article we will take a look at whether hedge funds think Fifth Third Bancorp (NASDAQ:FITB) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Fifth Third Bancorp (NASDAQ:FITB) has seen a decrease in activity from the world’s largest hedge funds lately. Fifth Third Bancorp (NASDAQ:FITB) was in 38 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 43. Our calculations also showed that FITB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Richard S. Pzena of Pzena Investment Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery 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. 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 homepage. With all of this in mind we’re going to take a peek at the key hedge fund action surrounding Fifth Third Bancorp (NASDAQ:FITB).

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

At Q1’s end, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards FITB over the last 23 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

Among these funds, Adage Capital Management held the most valuable stake in Fifth Third Bancorp (NASDAQ:FITB), which was worth $67 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $64.4 million worth of shares. Pzena Investment Management, Holocene Advisors, and AQR Capital 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 Strycker View Capital allocated the biggest weight to Fifth Third Bancorp (NASDAQ:FITB), around 5.1% of its 13F portfolio. Hourglass Capital is also relatively very bullish on the stock, setting aside 3.31 percent of its 13F equity portfolio to FITB.

Judging by the fact that Fifth Third Bancorp (NASDAQ:FITB) has experienced declining sentiment from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedge funds who were dropping their entire stakes heading into Q2. Interestingly, Dmitry Balyasny’s Balyasny Asset Management cut the biggest stake of the 750 funds watched by Insider Monkey, worth close to $23.1 million in stock, and Daniel Johnson’s Gillson Capital was right behind this move, as the fund sold off about $20.6 million worth. These moves are important to note, as aggregate hedge fund interest fell by 5 funds heading into Q2.

Let’s check out hedge fund activity in other stocks similar to Fifth Third Bancorp (NASDAQ:FITB). These stocks are Weyerhaeuser Co. (NYSE:WY), SVB Financial Group (NASDAQ:SIVB), MPLX LP (NYSE:MPLX), CBRE Group, Inc. (NYSE:CBRE), Royalty Pharma Plc (NASDAQ:RPRX), Ecopetrol S.A. (NYSE:EC), and Magna International Inc. (NYSE:MGA). This group of stocks’ market valuations match FITB’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $1028 million. That figure was $401 million in FITB’s case. SVB Financial Group (NASDAQ:SIVB) is the most popular stock in this table. On the other hand MPLX LP (NYSE:MPLX) is the least popular one with only 8 bullish hedge fund positions. Fifth Third Bancorp (NASDAQ:FITB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FITB is 63.1. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately FITB wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FITB were disappointed as the stock returned 5.5% since the end of March (through 6/25) 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 many of these stocks already outperformed the market since 2019.

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