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Is FMBI A Good Stock To Buy Now?

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·6 min read
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  • FMBI
  • FMBIO
  • FMBIP

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is First Midwest Bancorp Inc (NASDAQ:FMBI), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is FMBI a good stock to buy now? The best stock pickers were becoming hopeful. The number of bullish hedge fund bets increased by 6 lately. First Midwest Bancorp Inc (NASDAQ:FMBI) was in 17 hedge funds' portfolios at the end of September. The all time high for this statistic is 18. Our calculations also showed that FMBI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 11 hedge funds in our database with FMBI holdings at the end of June.

Video: Watch our video about the top 5 most popular hedge fund stocks.

According to most investors, hedge funds are seen as unimportant, outdated investment vehicles of years past. While there are over 8000 funds in operation at the moment, Our experts look at the leaders of this group, around 850 funds. It is estimated that this group of investors direct most of all hedge funds' total asset base, and by keeping an eye on their top picks, Insider Monkey has discovered various investment strategies that have historically surpassed the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .

Fred Cummings of Elizabeth Park Capital
Fred Cummings of Elizabeth Park Capital

Fred Cummings of Elizabeth Park Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. With all of this in mind let's take a look at the new hedge fund action regarding First Midwest Bancorp Inc (NASDAQ:FMBI).

Do Hedge Funds Think FMBI Is A Good Stock To Buy Now?

At the end of September, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 55% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FMBI over the last 21 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Pzena Investment Management held the most valuable stake in First Midwest Bancorp Inc (NASDAQ:FMBI), which was worth $22.8 million at the end of the third quarter. On the second spot was Millennium Management which amassed $5.6 million worth of shares. Elizabeth Park Capital Management, Arrowstreet Capital, and D E Shaw 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 Elizabeth Park Capital Management allocated the biggest weight to First Midwest Bancorp Inc (NASDAQ:FMBI), around 2.59% of its 13F portfolio. JCSD Capital is also relatively very bullish on the stock, designating 1.93 percent of its 13F equity portfolio to FMBI.

As one would reasonably expect, specific money managers have jumped into First Midwest Bancorp Inc (NASDAQ:FMBI) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the largest position in First Midwest Bancorp Inc (NASDAQ:FMBI). Arrowstreet Capital had $2.9 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also initiated a $1.2 million position during the quarter. The other funds with brand new FMBI positions are Dmitry Balyasny's Balyasny Asset Management, Renaissance Technologies, and Donald Sussman's Paloma Partners.

Let's now review hedge fund activity in other stocks similar to First Midwest Bancorp Inc (NASDAQ:FMBI). These stocks are HeadHunter Group PLC (NASDAQ:HHR), Delek Logistics Partners LP (NYSE:DKL), 360 DigiTech, Inc. (NASDAQ:QFIN), Retail Opportunity Investments Corp (NASDAQ:ROIC), Talend S.A. (NASDAQ:TLND), Astec Industries, Inc. (NASDAQ:ASTE), and Zuora, Inc. (NYSE:ZUO). This group of stocks' market values match FMBI's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HHR,8,18061,3 DKL,1,2964,0 QFIN,15,49651,3 ROIC,19,53660,-1 TLND,28,587292,0 ASTE,15,99097,5 ZUO,23,130724,2 Average,15.6,134493,1.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.6 hedge funds with bullish positions and the average amount invested in these stocks was $134 million. That figure was $44 million in FMBI's case. Talend S.A. (NASDAQ:TLND) is the most popular stock in this table. On the other hand Delek Logistics Partners LP (NYSE:DKL) is the least popular one with only 1 bullish hedge fund positions. First Midwest Bancorp Inc (NASDAQ:FMBI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FMBI is 68. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on FMBI as the stock returned 41.9% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.

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