Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Fifth Third Bancorp (NASDAQ:FITB) based on that data and determine whether they were really smart about the stock.
Fifth Third Bancorp (NASDAQ:FITB) investors should be aware of an increase in hedge fund sentiment lately. Fifth Third Bancorp (NASDAQ:FITB) was in 32 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 41. There were 30 hedge funds in our database with FITB positions at the end of the first quarter. Our calculations also showed that FITB isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Clint Carlson of Carlson Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we're going to take a look at the new hedge fund action encompassing Fifth Third Bancorp (NASDAQ:FITB).
Hedge fund activity in Fifth Third Bancorp (NASDAQ:FITB)
At the end of June, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from the previous quarter. By comparison, 29 hedge funds held shares or bullish call options in FITB a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
More specifically, Pzena Investment Management was the largest shareholder of Fifth Third Bancorp (NASDAQ:FITB), with a stake worth $66 million reported as of the end of September. Trailing Pzena Investment Management was Arrowstreet Capital, which amassed a stake valued at $57.9 million. Carlson Capital, Citadel Investment Group, and EJF Capital 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 EJF Capital allocated the biggest weight to Fifth Third Bancorp (NASDAQ:FITB), around 3.85% of its 13F portfolio. Elizabeth Park Capital Management is also relatively very bullish on the stock, designating 3.7 percent of its 13F equity portfolio to FITB.
Now, specific money managers were breaking ground themselves. Carlson Capital, managed by Clint Carlson, established the most valuable position in Fifth Third Bancorp (NASDAQ:FITB). Carlson Capital had $34.7 million invested in the company at the end of the quarter. Brandon Haley's Holocene Advisors also initiated a $15.9 million position during the quarter. The other funds with new positions in the stock are Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners, Fred Cummings's Elizabeth Park Capital Management, and Greg Eisner's Engineers Gate Manager.
Let's go over hedge fund activity in other stocks similar to Fifth Third Bancorp (NASDAQ:FITB). These stocks are Ventas, Inc. (NYSE:VTR), Zebra Technologies Corporation (NASDAQ:ZBRA), Teva Pharmaceutical Industries Limited (NYSE:TEVA), Nomura Holdings, Inc. (NYSE:NMR), Evergy, Inc. (NYSE:EVRG), Bio-Rad Laboratories, Inc. (NYSE:BIO), and Vipshop Holdings Limited (NYSE:VIPS). All of these stocks' market caps match FITB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VTR,21,167092,-4 ZBRA,38,788710,10 TEVA,31,1286113,2 NMR,5,19268,0 EVRG,40,1158134,10 BIO,54,1128712,15 VIPS,28,440769,-2 Average,31,712685,4.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $713 million. That figure was $355 million in FITB's case. Bio-Rad Laboratories, Inc. (NYSE:BIO) is the most popular stock in this table. On the other hand Nomura Holdings, Inc. (NYSE:NMR) is the least popular one with only 5 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 58. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23.8% in 2020 through September 14th and still beat the market by 17.6 percentage points. Hedge funds were also right about betting on FITB as the stock returned 15.4% during Q3 (through September 14th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.