In this article we will check out the progression of hedge fund sentiment towards Flushing Financial Corporation (NASDAQ:FFIC) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Flushing Financial Corporation (NASDAQ:FFIC) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds' portfolios at the end of the first quarter of 2020. At the end of this article we will also compare FFIC to other stocks including Cue Biopharma, Inc. (NASDAQ:CUE), UroGen Pharma Ltd. (NASDAQ:URGN), and Ready Capital Corporation (NYSE:RC) to get a better sense of its popularity. Video: Watch our video about the top 5 most popular hedge fund stocks.
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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_30621" align="aligncenter" width="393"] Cliff Asness of AQR Capital Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we're going to review the recent hedge fund action encompassing Flushing Financial Corporation (NASDAQ:FFIC).
How are hedge funds trading Flushing Financial Corporation (NASDAQ:FFIC)?
Heading into the second quarter of 2020, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 8 hedge funds with a bullish position in FFIC 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.
The largest stake in Flushing Financial Corporation (NASDAQ:FFIC) was held by GAMCO Investors, which reported holding $14.1 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $9.8 million position. Other investors bullish on the company included Millennium Management, Arrowstreet Capital, and AQR Capital Management. In terms of the portfolio weights assigned to each position GAMCO Investors allocated the biggest weight to Flushing Financial Corporation (NASDAQ:FFIC), around 0.17% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to FFIC.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the first quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Flushing Financial Corporation (NASDAQ:FFIC) but similarly valued. These stocks are Cue Biopharma, Inc. (NASDAQ:CUE), UroGen Pharma Ltd. (NASDAQ:URGN), Ready Capital Corporation (NYSE:RC), and Digital Turbine Inc (NASDAQ:APPS). This group of stocks' market caps match FFIC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CUE,14,111721,3 URGN,7,36342,-1 RC,9,16399,-2 APPS,22,49594,2 Average,13,53514,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $30 million in FFIC's case. Digital Turbine Inc (NASDAQ:APPS) is the most popular stock in this table. On the other hand UroGen Pharma Ltd. (NASDAQ:URGN) is the least popular one with only 7 bullish hedge fund positions. Flushing Financial Corporation (NASDAQ:FFIC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately FFIC wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); FFIC investors were disappointed as the stock returned -15.4% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.