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We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds' top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like First Financial Corporation (NASDAQ:THFF).
First Financial Corporation (NASDAQ:THFF) investors should pay attention to an increase in support from the world's most elite money managers in recent months. THFF was in 9 hedge funds' portfolios at the end of the second quarter of 2019. There were 7 hedge funds in our database with THFF positions at the end of the previous quarter. Our calculations also showed that THFF isn't among the 30 most popular stocks among hedge funds (see the video below).
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely 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. Let's view the recent hedge fund action regarding First Financial Corporation (NASDAQ:THFF).
What have hedge funds been doing with First Financial Corporation (NASDAQ:THFF)?
At Q2's end, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 29% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in THFF over the last 16 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in First Financial Corporation (NASDAQ:THFF) was held by Renaissance Technologies, which reported holding $7.3 million worth of stock at the end of March. It was followed by Millennium Management with a $2.4 million position. Other investors bullish on the company included Arrowstreet Capital, GLG Partners, and D E Shaw.
Consequently, specific money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, assembled the largest position in First Financial Corporation (NASDAQ:THFF). Citadel Investment Group had $0.3 million invested in the company at the end of the quarter. Chuck Royce's Royce & Associates also made a $0 million investment in the stock during the quarter.
Let's now review hedge fund activity in other stocks similar to First Financial Corporation (NASDAQ:THFF). We will take a look at American Public Education, Inc. (NASDAQ:APEI), Arrow Financial Corporation (NASDAQ:AROW), Dermira Inc (NASDAQ:DERM), and SI-BONE, Inc. (NASDAQ:SIBN). This group of stocks' market caps are similar to THFF's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position APEI,13,75843,-2 AROW,3,12810,1 DERM,21,156866,-3 SIBN,9,59536,4 Average,11.5,76264,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $15 million in THFF's case. Dermira Inc (NASDAQ:DERM) is the most popular stock in this table. On the other hand Arrow Financial Corporation (NASDAQ:AROW) is the least popular one with only 3 bullish hedge fund positions. First Financial Corporation (NASDAQ:THFF) 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 THFF as the stock returned 8.2% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
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