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In this article you are going to find out whether hedge funds think First Horizon National Corporation (NYSE:FHN) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is FHN stock a buy? Hedge fund interest in First Horizon National Corporation (NYSE:FHN) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that FHN isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). At the end of this article we will also compare FHN to other stocks including Donaldson Company, Inc. (NYSE:DCI), Redfin Corporation (NASDAQ:RDFN), and SiteOne Landscape Supply, Inc. (NYSE:SITE) to get a better sense of its popularity.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).
Clint Carlson of Carlson Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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. Now let's review the new hedge fund action encompassing First Horizon National Corporation (NYSE:FHN).
Do Hedge Funds Think FHN Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 27 hedge funds with a bullish position in FHN a year ago. With hedgies' capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in First Horizon National Corporation (NYSE:FHN) was held by Citadel Investment Group, which reported holding $211.9 million worth of stock at the end of December. It was followed by Arrowstreet Capital with a $52.2 million position. Other investors bullish on the company included Carlson Capital, Gillson Capital, and Huber Capital Management. In terms of the portfolio weights assigned to each position Mendon Capital Advisors allocated the biggest weight to First Horizon National Corporation (NYSE:FHN), around 4.19% of its 13F portfolio. Huber Capital Management is also relatively very bullish on the stock, designating 3.95 percent of its 13F equity portfolio to FHN.
Due to the fact that First Horizon National Corporation (NYSE:FHN) has faced a decline in interest from hedge fund managers, logic holds that there were a few fund managers who were dropping their entire stakes by the end of the fourth quarter. Interestingly, Anand Parekh's Alyeska Investment Group sold off the biggest position of the 750 funds followed by Insider Monkey, valued at about $9.9 million in stock, and Emanuel J. Friedman's EJF Capital was right behind this move, as the fund said goodbye to about $8 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as First Horizon National Corporation (NYSE:FHN) but similarly valued. These stocks are Donaldson Company, Inc. (NYSE:DCI), Redfin Corporation (NASDAQ:RDFN), SiteOne Landscape Supply, Inc. (NYSE:SITE), Royal Gold, Inc (NASDAQ:RGLD), Cleveland-Cliffs Inc (NYSE:CLF), Lemonade, Inc. (NYSE:LMND), and Lincoln Electric Holdings, Inc. (NASDAQ:LECO). All of these stocks' market caps match FHN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DCI,26,311896,-4 RDFN,21,209673,-7 SITE,17,72044,-11 RGLD,26,284227,-4 CLF,27,682934,5 LMND,13,211852,-2 LECO,20,273498,-4 Average,21.4,292303,-3.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.4 hedge funds with bullish positions and the average amount invested in these stocks was $292 million. That figure was $403 million in FHN's case. Cleveland-Cliffs Inc (NYSE:CLF) is the most popular stock in this table. On the other hand Lemonade, Inc. (NYSE:LMND) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks First Horizon National Corporation (NYSE:FHN) is more popular among hedge funds. Our overall hedge fund sentiment score for FHN is 80.7. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 12.2% in 2021 through April 12th but still managed to beat the market by 1.5 percentage points. Hedge funds were also right about betting on FHN as the stock returned 38% since the end of December (through 4/12) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.