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Is FCF A Good Stock To Buy Now?

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Debasis Saha
·6 min read
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In this article we will take a look at whether hedge funds think First Commonwealth Financial (NYSE:FCF) 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.

Is FCF a good stock to buy now? First Commonwealth Financial (NYSE:FCF) was in 18 hedge funds' portfolios at the end of September. The all time high for this statistic is 15. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. FCF has experienced an increase in hedge fund sentiment recently. There were 15 hedge funds in our database with FCF holdings at the end of June. Our calculations also showed that FCF isn't among the 30 most popular stocks among hedge funds (click for Q3 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.

If you'd ask most stock holders, hedge funds are viewed as underperforming, old financial tools of the past. While there are more than 8000 funds trading at the moment, We look at the top tier of this club, approximately 850 funds. Most estimates calculate that this group of people control the majority of the smart money's total capital, and by shadowing their best investments, Insider Monkey has revealed many investment strategies that have historically outstripped Mr. Market. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Minhua Zhang of Weld Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. 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. Keeping this in mind we're going to take a glance at the fresh hedge fund action regarding First Commonwealth Financial (NYSE:FCF).

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

At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the second quarter of 2020. On the other hand, there were a total of 12 hedge funds with a bullish position in FCF a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is FCF A Good Stock To Buy?
Is FCF A Good Stock To Buy?

The largest stake in First Commonwealth Financial (NYSE:FCF) was held by Arrowstreet Capital, which reported holding $7.7 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $6.2 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Weld Capital Management allocated the biggest weight to First Commonwealth Financial (NYSE:FCF), around 0.09% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, setting aside 0.07 percent of its 13F equity portfolio to FCF.

Consequently, specific money managers were leading the bulls' herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the biggest position in First Commonwealth Financial (NYSE:FCF). Marshall Wace LLP had $1.3 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $0.2 million position during the quarter. The other funds with brand new FCF positions are Minhua Zhang's Weld Capital Management and Benjamin A. Smith's Laurion Capital Management.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as First Commonwealth Financial (NYSE:FCF) but similarly valued. We will take a look at Endo International plc (NASDAQ:ENDP), Orion Engineered Carbons SA (NYSE:OEC), Textainer Group Holdings Limited (NYSE:TGH), Seritage Growth Properties (NYSE:SRG), Phoenix Tree Holdings Limited (NYSE:DNK), Nantkwest Inc (NASDAQ:NK), and Central Securities Corporation (NYSE:CET). This group of stocks' market caps are closest to FCF's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ENDP,17,159822,-4 OEC,20,130513,-1 TGH,9,17681,0 SRG,12,126062,-6 DNK,3,151959,0 NK,10,6919,2 CET,3,16311,0 Average,10.6,87038,-1.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.6 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $28 million in FCF's case. Orion Engineered Carbons SA (NYSE:OEC) is the most popular stock in this table. On the other hand Phoenix Tree Holdings Limited (NYSE:DNK) is the least popular one with only 3 bullish hedge fund positions. First Commonwealth Financial (NYSE:FCF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FCF is 82.1. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on FCF as the stock returned 35.7% since the end of Q3 (through 12/14) 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.

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