Hedge funds run by legendary names like George Soros and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant outperformance. That's why we pay special attention to hedge fund activity in these stocks.
First Bancorp (NYSE:FBP) investors should be aware of a decrease in activity from the world's largest hedge funds recently. FBP was in 18 hedge funds' portfolios at the end of March. There were 20 hedge funds in our database with FBP holdings at the end of the previous quarter. Our calculations also showed that fbp isn't among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's review the latest hedge fund action surrounding First Bancorp (NYSE:FBP).
Hedge fund activity in First Bancorp (NYSE:FBP)
Heading into the second quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the previous quarter. By comparison, 19 hedge funds held shares or bullish call options in FBP a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in First Bancorp (NYSE:FBP) was held by Moore Global Investments, which reported holding $86.3 million worth of stock at the end of March. It was followed by Alyeska Investment Group with a $40.8 million position. Other investors bullish on the company included Two Sigma Advisors, GLG Partners, and D E Shaw.
Due to the fact that First Bancorp (NYSE:FBP) has faced bearish sentiment from the aggregate hedge fund industry, it's easy to see that there were a few hedgies that elected to cut their entire stakes heading into Q3. It's worth mentioning that Dmitry Balyasny's Balyasny Asset Management sold off the biggest position of the 700 funds watched by Insider Monkey, comprising close to $4 million in stock. Clint Carlson's fund, Carlson Capital, also dumped its stock, about $2.4 million worth. These transactions are interesting, as total hedge fund interest fell by 2 funds heading into Q3.
Let's now take a look at hedge fund activity in other stocks similar to First Bancorp (NYSE:FBP). These stocks are Cirrus Logic, Inc. (NASDAQ:CRUS), QTS Realty Trust Inc (NYSE:QTS), Advanced Disposal Services, Inc. (NYSE:ADSW), and Seritage Growth Properties (NYSE:SRG). This group of stocks' market valuations resemble FBP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CRUS,17,226684,-3 QTS,22,371693,6 ADSW,12,123110,-3 SRG,17,451405,3 Average,17,293223,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $293 million. That figure was $247 million in FBP's case. QTS Realty Trust Inc (NYSE:QTS) is the most popular stock in this table. On the other hand Advanced Disposal Services, Inc. (NYSE:ADSW) is the least popular one with only 12 bullish hedge fund positions. First Bancorp (NYSE:FBP) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately FBP wasn't nearly as popular as these 20 stocks and hedge funds that were betting on FBP were disappointed as the stock returned -11.3% during the same period 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 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.