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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of March 31st, 2020. What do these smart investors think about Flagstar Bancorp Inc (NYSE:FBC)?
Is Flagstar Bancorp Inc (NYSE:FBC) a healthy stock for your portfolio? Investors who are in the know are selling. The number of long hedge fund positions went down by 5 lately. Our calculations also showed that FBC 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). FBC was in 15 hedge funds' portfolios at the end of the first quarter of 2020. There were 20 hedge funds in our database with FBC holdings at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_25717" align="aligncenter" width="400"] Steven Cohen of Point72 Asset Management[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. 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. Keeping this in mind let's analyze the key hedge fund action encompassing Flagstar Bancorp Inc (NYSE:FBC).
What does smart money think about Flagstar Bancorp Inc (NYSE:FBC)?
Heading into the second quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the previous quarter. On the other hand, there were a total of 14 hedge funds with a bullish position in FBC a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, holds the most valuable position in Flagstar Bancorp Inc (NYSE:FBC). Renaissance Technologies has a $21.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Matthew Lindenbaum of Basswood Capital, with a $8.5 million position; the fund has 1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish contain Israel Englander's Millennium Management, Usman Waheed's Strycker View Capital and David Harding's Winton Capital Management. In terms of the portfolio weights assigned to each position Strycker View Capital allocated the biggest weight to Flagstar Bancorp Inc (NYSE:FBC), around 5.09% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, dishing out 1 percent of its 13F equity portfolio to FBC.
Because Flagstar Bancorp Inc (NYSE:FBC) has faced falling interest from the smart money, we can see that there is a sect of funds that decided to sell off their full holdings last quarter. At the top of the heap, Noam Gottesman's GLG Partners cut the biggest stake of the 750 funds followed by Insider Monkey, valued at an estimated $7.7 million in stock. Benjamin A. Smith's fund, Laurion Capital Management, also dropped its stock, about $7.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 5 funds last quarter.
Let's now take a look at hedge fund activity in other stocks similar to Flagstar Bancorp Inc (NYSE:FBC). We will take a look at Covanta Holding Corporation (NYSE:CVA), Pacific Premier Bancorp, Inc. (NASDAQ:PPBI), Tri Continental Corporation (NYSE:TY), and Victory Capital Holdings, Inc. (NASDAQ:VCTR). This group of stocks' market caps resemble FBC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CVA,25,55880,6 PPBI,8,30230,-4 TY,3,2165,1 VCTR,8,64756,1 Average,11,38258,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $38 million. That figure was $66 million in FBC's case. Covanta Holding Corporation (NYSE:CVA) is the most popular stock in this table. On the other hand Tri Continental Corporation (NYSE:TY) is the least popular one with only 3 bullish hedge fund positions. Flagstar Bancorp Inc (NYSE:FBC) 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 13.3% in 2020 through June 25th but still beat the market by 16.8 percentage points. Hedge funds were also right about betting on FBC as the stock returned 44.1% in Q2 (through June 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.