The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded First Foundation Inc (NASDAQ:FFWM) and determine whether the smart money was really smart about this stock.
Is First Foundation Inc (NASDAQ:FFWM) the right pick for your portfolio? The best stock pickers were becoming less hopeful. The number of long hedge fund positions retreated by 1 lately. Our calculations also showed that FFWM isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most stock holders, hedge funds are viewed as underperforming, old financial vehicles of years past. While there are greater than 8000 funds trading at present, Our experts hone in on the crème de la crème of this group, approximately 850 funds. These investment experts administer the majority of the hedge fund industry's total asset base, and by keeping an eye on their top picks, Insider Monkey has uncovered many 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 year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_746893" align="aligncenter" width="383"] Paul Marshall of Marshall Wace[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. 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. With all of this in mind let's go over the key hedge fund action encompassing First Foundation Inc (NASDAQ:FFWM).
What does smart money think about First Foundation Inc (NASDAQ:FFWM)?
At Q1's end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FFWM over the last 18 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in First Foundation Inc (NASDAQ:FFWM) was held by Azora Capital, which reported holding $11 million worth of stock at the end of September. It was followed by Royce & Associates with a $3.3 million position. Other investors bullish on the company included Renaissance Technologies, Citadel Investment Group, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position Azora Capital allocated the biggest weight to First Foundation Inc (NASDAQ:FFWM), around 4.25% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, earmarking 0.07 percent of its 13F equity portfolio to FFWM.
Due to the fact that First Foundation Inc (NASDAQ:FFWM) has faced a decline in interest from hedge fund managers, we can see that there exists a select few hedgies that slashed their entire stakes last quarter. Interestingly, Robert I. Usdan and Wayne K. Goldstein's Endicott Management cut the largest position of the "upper crust" of funds monitored by Insider Monkey, comprising about $19.9 million in stock, and Anton Schutz's Mendon Capital Advisors was right behind this move, as the fund sold off about $9.7 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds last quarter.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as First Foundation Inc (NASDAQ:FFWM) but similarly valued. We will take a look at MGP Ingredients Inc (NASDAQ:MGPI), The Shyft Group, Inc. (NASDAQ:SPAR), Heritage Commerce Corp. (NASDAQ:HTBK), and Apollo Medical Holdings, Inc. (NASDAQ:AMEH). This group of stocks' market values are closest to FFWM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MGPI,11,10980,-4 SPAR,17,57823,-1 HTBK,9,15364,-4 AMEH,4,2310,0 Average,10.25,21619,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $21 million in FFWM's case. The Shyft Group, Inc. (NASDAQ:SPAR) is the most popular stock in this table. On the other hand Apollo Medical Holdings, Inc. (NASDAQ:AMEH) is the least popular one with only 4 bullish hedge fund positions. First Foundation Inc (NASDAQ:FFWM) is not the most popular stock in this group but hedge fund interest is still above average. 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 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on FFWM as the stock returned 60.6% in Q2 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.