The elite funds run by legendary investors such as David Tepper and Dan Loeb make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don't follow. Because of their pay structures, they have strong incentives to do the research necessary to beat the market. That's why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at First Interstate Bancsystem Inc (NASDAQ:FIBK) from the perspective of those elite funds.
First Interstate Bancsystem Inc (NASDAQ:FIBK) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 11 hedge funds' portfolios at the end of the second quarter of 2019. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as AMN Healthcare Services Inc (NYSE:AMN), Oi SA (NYSE:OIBR), and Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) to gather more data points. Our calculations also showed that FIBK isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a look at the new hedge fund action encompassing First Interstate Bancsystem Inc (NASDAQ:FIBK).
How have hedgies been trading First Interstate Bancsystem Inc (NASDAQ:FIBK)?
Heading into the third quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FIBK over the last 16 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in First Interstate Bancsystem Inc (NASDAQ:FIBK) was held by Citadel Investment Group, which reported holding $25.9 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $19.8 million position. Other investors bullish on the company included Balyasny Asset Management, Mendon Capital Advisors, and Two Sigma Advisors.
Judging by the fact that First Interstate Bancsystem Inc (NASDAQ:FIBK) has faced declining sentiment from the smart money, we can see that there were a few hedgies who sold off their entire stakes last quarter. Intriguingly, Israel Englander's Millennium Management sold off the biggest stake of all the hedgies watched by Insider Monkey, comprising an estimated $29.1 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also dropped its stock, about $1 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as First Interstate Bancsystem Inc (NASDAQ:FIBK) but similarly valued. These stocks are AMN Healthcare Services Inc (NYSE:AMN), Oi SA (NYSE:OIBR), Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA), and Beacon Roofing Supply, Inc. (NASDAQ:BECN). This group of stocks' market values are similar to FIBK's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMN,14,109685,3 OIBR,18,866887,-3 IBA,3,39180,0 BECN,16,400438,-2 Average,12.75,354048,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $354 million. That figure was $66 million in FIBK's case. Oi SA (NYSE:OIBR) is the most popular stock in this table. On the other hand Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) is the least popular one with only 3 bullish hedge fund positions. First Interstate Bancsystem Inc (NASDAQ:FIBK) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on FIBK, though not to the same extent, as the stock returned 2.4% during the third quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.