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 752 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 September 30th. In this article we look at what those investors think of First Horizon National Corporation (NYSE:FHN).
Is First Horizon National Corporation (NYSE:FHN) going to take off soon? Money managers are getting more bullish. The number of bullish hedge fund bets inched up by 8 recently. Our calculations also showed that FHN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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_758429" align="aligncenter" width="450"] Ric Dillon of Diamond Hill Capital[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a gander at the fresh hedge fund action encompassing First Horizon National Corporation (NYSE:FHN).
What have hedge funds been doing with First Horizon National Corporation (NYSE:FHN)?
Heading into the fourth quarter of 2019, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 35% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FHN over the last 17 quarters. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Israel Englander's Millennium Management has the biggest position in First Horizon National Corporation (NYSE:FHN), worth close to $44.8 million, amounting to 0.1% of its total 13F portfolio. On Millennium Management's heels is Citadel Investment Group, managed by Ken Griffin, which holds a $26.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions consist of Ric Dillon's Diamond Hill Capital, Paul Marshall and Ian Wace's Marshall Wace and Emanuel J. Friedman's EJF Capital. In terms of the portfolio weights assigned to each position Forest Hill Capital allocated the biggest weight to First Horizon National Corporation (NYSE:FHN), around 3.05% of its portfolio. EJF Capital is also relatively very bullish on the stock, setting aside 1.7 percent of its 13F equity portfolio to FHN.
As industrywide interest jumped, some big names were leading the bulls' herd. Marshall Wace, managed by Paul Marshall and Ian Wace, initiated the biggest position in First Horizon National Corporation (NYSE:FHN). Marshall Wace had $13.7 million invested in the company at the end of the quarter. Renaissance Technologies also made a $8.6 million investment in the stock during the quarter. The other funds with brand new FHN positions are John Overdeck and David Siegel's Two Sigma Advisors, Daniel Johnson's Gillson Capital, and Ravi Chopra's Azora Capital.
Let's now take a look at hedge fund activity in other stocks similar to First Horizon National Corporation (NYSE:FHN). We will take a look at TFS Financial Corporation (NASDAQ:TFSL), Texas Pacific Land Trust (NYSE:TPL), Manpowergroup Inc (NYSE:MAN), and Portland General Electric Company (NYSE:POR). This group of stocks' market valuations are similar to FHN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TFSL,8,157723,3 TPL,12,1254260,-4 MAN,19,377209,2 POR,23,391261,5 Average,15.5,545113,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $545 million. That figure was $193 million in FHN's case. Portland General Electric Company (NYSE:POR) is the most popular stock in this table. On the other hand TFS Financial Corporation (NASDAQ:TFSL) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks First Horizon National Corporation (NYSE:FHN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately FHN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on FHN were disappointed as the stock returned -0.7% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.