Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Regions Financial Corporation (NYSE:RF) in this article.
Regions Financial Corporation (NYSE:RF) has seen a decrease in hedge fund interest recently. RF was in 41 hedge funds' portfolios at the end of March. There were 42 hedge funds in our database with RF positions at the end of the previous quarter. Our calculations also showed that rf isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to take a peek at the fresh hedge fund action surrounding Regions Financial Corporation (NYSE:RF).
How have hedgies been trading Regions Financial Corporation (NYSE:RF)?
Heading into the second quarter of 2019, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of -2% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in RF over the last 15 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Among these funds, Millennium Management held the most valuable stake in Regions Financial Corporation (NYSE:RF), which was worth $163.4 million at the end of the first quarter. On the second spot was Two Sigma Advisors which amassed $89 million worth of shares. Moreover, Arrowstreet Capital, Pzena Investment Management, and Citadel Investment Group were also bullish on Regions Financial Corporation (NYSE:RF), allocating a large percentage of their portfolios to this stock.
Because Regions Financial Corporation (NYSE:RF) has experienced bearish sentiment from the smart money, it's safe to say that there was a specific group of funds that slashed their positions entirely in the third quarter. Interestingly, Steve Cohen's Point72 Asset Management sold off the biggest stake of the "upper crust" of funds followed by Insider Monkey, valued at close to $39.6 million in stock. Matthew Knauer and Mina Faltas's fund, Nokota Management, also sold off its stock, about $27.3 million worth. These moves are interesting, as total hedge fund interest dropped by 1 funds in the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Regions Financial Corporation (NYSE:RF) but similarly valued. We will take a look at Equifax Inc. (NYSE:EFX), ZTO Express (Cayman) Inc. (NYSE:ZTO), Skyworks Solutions Inc (NASDAQ:SWKS), and Cardinal Health, Inc. (NYSE:CAH). All of these stocks' market caps resemble RF's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position EFX,24,1247020,2 ZTO,16,335206,3 SWKS,38,964084,6 CAH,26,849877,-9 Average,26,849047,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $849 million. That figure was $788 million in RF's case. Skyworks Solutions Inc (NASDAQ:SWKS) is the most popular stock in this table. On the other hand ZTO Express (Cayman) Inc. (NYSE:ZTO) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Regions Financial Corporation (NYSE:RF) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on RF, though not to the same extent, as the stock returned -0.6% during the same period and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.