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As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds' thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about First Horizon National Corporation (NYSE:FHN).
First Horizon National Corporation (NYSE:FHN) was in 27 hedge funds' portfolios at the end of March. The all time high for this statistic is 35. FHN investors should be aware of a decrease in hedge fund sentiment of late. There were 30 hedge funds in our database with FHN holdings at the end of December. Our calculations also showed that FHN isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to take a gander at the fresh hedge fund action surrounding First Horizon National Corporation (NYSE:FHN).
Do Hedge Funds Think FHN Is A Good Stock To Buy Now?
At first quarter's end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in FHN over the last 23 quarters. With hedge funds' capital changing hands, there exists a few key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in First Horizon National Corporation (NYSE:FHN), which was worth $122.2 million at the end of the fourth quarter. On the second spot was Duquesne Capital which amassed $33 million worth of shares. Balyasny Asset Management, Millennium Management, and Huber Capital Management 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 Huber Capital Management allocated the biggest weight to First Horizon National Corporation (NYSE:FHN), around 4.04% of its 13F portfolio. Forest Hill Capital is also relatively very bullish on the stock, designating 3.71 percent of its 13F equity portfolio to FHN.
Since First Horizon National Corporation (NYSE:FHN) has witnessed bearish sentiment from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of fund managers that decided to sell off their positions entirely last quarter. It's worth mentioning that Clint Carlson's Carlson Capital cut the biggest investment of the 750 funds monitored by Insider Monkey, valued at about $21.8 million in stock. Daniel Johnson's fund, Gillson Capital, also cut its stock, about $13.5 million worth. These moves are interesting, as total hedge fund interest fell by 3 funds last quarter.
Let's also examine hedge fund activity in other stocks similar to First Horizon National Corporation (NYSE:FHN). These stocks are AptarGroup, Inc. (NYSE:ATR), Deckers Outdoor Corp (NASDAQ:DECK), Jazz Pharmaceuticals Plc (NASDAQ:JAZZ), First Solar, Inc. (NASDAQ:FSLR), Pegasystems Inc. (NASDAQ:PEGA), Companhia Siderurgica Nacional (NYSE:SID), and WEX Inc (NYSE:WEX). This group of stocks' market valuations resemble FHN's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATR,20,259991,0 DECK,40,922422,-5 JAZZ,37,1260492,8 FSLR,24,304351,-10 PEGA,35,1728264,3 SID,10,60938,1 WEX,26,538269,0 Average,27.4,724961,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $725 million. That figure was $312 million in FHN's case. Deckers Outdoor Corp (NASDAQ:DECK) is the most popular stock in this table. On the other hand Companhia Siderurgica Nacional (NYSE:SID) is the least popular one with only 10 bullish hedge fund positions. First Horizon National Corporation (NYSE:FHN) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for FHN is 53.5. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and surpassed the market again by 6.7 percentage points. Unfortunately FHN wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); FHN investors were disappointed as the stock returned 0.1% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.