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With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was Flagstar Bancorp Inc (NYSE:FBC).
Hedge fund interest in Flagstar Bancorp Inc (NYSE:FBC) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that FBC isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare FBC to other stocks including CryoPort, Inc. (NASDAQ:CYRX), Cubic Corporation (NYSE:CUB), and WSFS Financial Corporation (NASDAQ:WSFS) to get a better sense of its popularity.
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 115 percentage points since March 2017 (see the details here). That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Gelband of ExodusPoint Capital
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. Now let's view the key hedge fund action regarding Flagstar Bancorp Inc (NYSE:FBC).
Do Hedge Funds Think FBC Is A Good Stock To Buy Now?
At the end of March, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in FBC a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Basswood Capital, managed by Matthew Lindenbaum, holds the largest position in Flagstar Bancorp Inc (NYSE:FBC). Basswood Capital has a $76.4 million position in the stock, comprising 3.4% of its 13F portfolio. Sitting at the No. 2 spot is Rima Senvest Management, led by Richard Mashaal, holding a $47.3 million position; 1.5% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism encompass Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, D. E. Shaw's D E Shaw and Renaissance Technologies. In terms of the portfolio weights assigned to each position Basswood Capital allocated the biggest weight to Flagstar Bancorp Inc (NYSE:FBC), around 3.45% of its 13F portfolio. Steamboat Capital Partners is also relatively very bullish on the stock, dishing out 2.53 percent of its 13F equity portfolio to FBC.
Due to the fact that Flagstar Bancorp Inc (NYSE:FBC) has experienced declining sentiment from the aggregate hedge fund industry, it's safe to say that there is a sect of funds who were dropping their full holdings last quarter. Intriguingly, David Rosen's Rubric Capital Management sold off the biggest position of all the hedgies watched by Insider Monkey, totaling an estimated $30.8 million in stock, and Steve Cohen's Point72 Asset Management was right behind this move, as the fund said goodbye to about $16.7 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks similar to Flagstar Bancorp Inc (NYSE:FBC). We will take a look at CryoPort, Inc. (NASDAQ:CYRX), Cubic Corporation (NYSE:CUB), WSFS Financial Corporation (NASDAQ:WSFS), Mueller Industries, Inc. (NYSE:MLI), Ultra Clean Holdings Inc (NASDAQ:UCTT), Boise Cascade Co (NYSE:BCC), and Avaya Holdings Corp. (NYSE:AVYA). This group of stocks' market caps match FBC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CYRX,20,129372,-1 CUB,31,454987,18 WSFS,10,87691,-3 MLI,20,249631,1 UCTT,17,189267,-4 BCC,16,57143,-5 AVYA,37,425521,2 Average,21.6,227659,1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $228 million. That figure was $277 million in FBC's case. Avaya Holdings Corp. (NYSE:AVYA) is the most popular stock in this table. On the other hand WSFS Financial Corporation (NASDAQ:WSFS) is the least popular one with only 10 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 overall hedge fund sentiment score for FBC is 68.3. 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 positive signal but 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 beat the market again by 6.7 percentage points. Unfortunately FBC wasn't nearly as popular as these 5 stocks and hedge funds that were betting on FBC were disappointed as the stock returned -4.2% 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 many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.