We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57% each. Hedge funds' top 3 stock picks returned 44.6% this year and beat the S&P 500 ETFs by nearly 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Fifth Third Bancorp (NASDAQ:FITB).
Fifth Third Bancorp (NASDAQ:FITB) was in 34 hedge funds' portfolios at the end of September. FITB has seen an increase in hedge fund interest in recent months. There were 29 hedge funds in our database with FITB holdings at the end of the previous quarter. Our calculations also showed that FITB isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).
If you'd ask most stock holders, hedge funds are seen as worthless, old financial vehicles of the past. While there are over 8000 funds in operation at the moment, Our researchers look at the leaders of this club, about 750 funds. These money managers direct the lion's share of the hedge fund industry's total asset base, and by monitoring their first-class equity investments, Insider Monkey has revealed numerous investment strategies that have historically outstripped the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points per annum since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_27480" align="alignnone" width="600"] Israel Englander of Millennium Management[/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. Now let's take a glance at the key hedge fund action encompassing Fifth Third Bancorp (NASDAQ:FITB).
What does smart money think about Fifth Third Bancorp (NASDAQ:FITB)?
At Q3's end, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the previous quarter. On the other hand, there were a total of 24 hedge funds with a bullish position in FITB a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Millennium Management was the largest shareholder of Fifth Third Bancorp (NASDAQ:FITB), with a stake worth $160.8 million reported as of the end of September. Trailing Millennium Management was AQR Capital Management, which amassed a stake valued at $139.5 million. Citadel Investment Group, Pzena Investment Management, and Arrowstreet 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 BlueMar Capital Management allocated the biggest weight to Fifth Third Bancorp (NASDAQ:FITB), around 1.97% of its 13F portfolio. Carlson Capital is also relatively very bullish on the stock, designating 1.94 percent of its 13F equity portfolio to FITB.
As aggregate interest increased, specific money managers have jumped into Fifth Third Bancorp (NASDAQ:FITB) headfirst. Laurion Capital Management, managed by Benjamin A. Smith, initiated the most valuable position in Fifth Third Bancorp (NASDAQ:FITB). Laurion Capital Management had $10.5 million invested in the company at the end of the quarter. Perella Weinberg Partners also initiated a $3.3 million position during the quarter. The other funds with new positions in the stock are Paul Tudor Jones's Tudor Investment Corp, Ray Dalio's Bridgewater Associates, and Karim Abbadi and Edward McBride's Centiva Capital.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Fifth Third Bancorp (NASDAQ:FITB) but similarly valued. We will take a look at Twenty-First Century Fox Inc (NASDAQ:FOX), Twenty-First Century Fox Inc (NASDAQ:FOXA), Rogers Communications Inc. (NYSE:RCI), and D.R. Horton, Inc. (NYSE:DHI). This group of 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 FOX,27,849332,-3 FOXA,48,2457821,-12 RCI,21,440152,7 DHI,53,2555525,6 Average,37.25,1575708,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.25 hedge funds with bullish positions and the average amount invested in these stocks was $1576 million. That figure was $1028 million in FITB's case. D.R. Horton, Inc. (NYSE:DHI) is the most popular stock in this table. On the other hand Rogers Communications Inc. (NYSE:RCI) is the least popular one with only 21 bullish hedge fund positions. Fifth Third Bancorp (NASDAQ:FITB) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. A small number of hedge funds were also right about betting on FITB, though not to the same extent, as the stock returned 35.1% in 2019 (as of 12/23) and outperformed the market. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.