The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded FB Financial Corporation (NYSE:FBK) based on those filings.
Is FB Financial Corporation (NYSE:FBK) a buy here? Hedge funds are becoming hopeful. The number of long hedge fund positions inched up by 3 recently. Our calculations also showed that FBK isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). FBK was in 7 hedge funds' portfolios at the end of the third quarter of 2019. There were 4 hedge funds in our database with FBK holdings at the end of the previous quarter. Video: Click the image to 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' 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_26340" align="aligncenter" width="594"] Ken Griffin of Citadel Investment Group[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind we're going to take a look at the new hedge fund action regarding FB Financial Corporation (NYSE:FBK).
How have hedgies been trading FB Financial Corporation (NYSE:FBK)?
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 75% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in FBK a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Mendon Capital Advisors held the most valuable stake in FB Financial Corporation (NYSE:FBK), which was worth $47 million at the end of the third quarter. On the second spot was Cardinal Capital which amassed $28.2 million worth of shares. Renaissance Technologies, Citadel Investment Group, 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 Mendon Capital Advisors allocated the biggest weight to FB Financial Corporation (NYSE:FBK), around 7.93% of its 13F portfolio. Cardinal Capital is also relatively very bullish on the stock, earmarking 0.93 percent of its 13F equity portfolio to FBK.
Consequently, some big names were leading the bulls' herd. Millennium Management, managed by Israel Englander, created the most outsized position in FB Financial Corporation (NYSE:FBK). Millennium Management had $0.5 million invested in the company at the end of the quarter. David Harding's Winton Capital Management also made a $0.4 million investment in the stock during the quarter. The only other fund with a brand new FBK position is Michael Gelband's ExodusPoint Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as FB Financial Corporation (NYSE:FBK) but similarly valued. These stocks are Schweitzer-Mauduit International, Inc. (NYSE:SWM), Stratasys, Ltd. (NASDAQ:SSYS), Veracyte Inc (NASDAQ:VCYT), and Southside Bancshares, Inc. (NASDAQ:SBSI). This group of stocks' market caps resemble FBK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SWM,8,28250,-2 SSYS,13,108677,-3 VCYT,18,102679,-6 SBSI,7,56884,0 Average,11.5,74123,-2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $74 million. That figure was $81 million in FBK's case. Veracyte Inc (NASDAQ:VCYT) is the most popular stock in this table. On the other hand Southside Bancshares, Inc. (NASDAQ:SBSI) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks FB Financial Corporation (NYSE:FBK) is even less popular than SBSI. Hedge funds dodged a bullet by taking a bearish stance towards FBK. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately FBK wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); FBK investors were disappointed as the stock returned 2.7% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.