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First Niagara Financial Group Inc. (FNFG): Are Hedge Funds Right About This Stock?

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Should First Niagara Financial Group Inc. (NASDAQ:FNFG) investors track the following data?

To many market players, hedge funds are assumed to be bloated, old financial vehicles of a period lost to current times. Although there are more than 8,000 hedge funds in operation today, this site focuses on the upper echelon of this club, about 525 funds. Analysts calculate that this group controls the lion’s share of the hedge fund industry’s total assets, and by tracking their highest quality equity investments, we’ve revealed a number of investment strategies that have historically outperformed the S&P 500. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (find the details here).

Equally as useful, bullish insider trading sentiment is another way to analyze the marketplace. There are a number of incentives for a corporate insider to sell shares of his or her company, but only one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this strategy if investors understand where to look (learn more here).

Now that that’s out of the way, let’s analyze the latest info surrounding First Niagara Financial Group Inc. (NASDAQ:FNFG).

First Niagara Financial Group Inc. (NASDAQ:FNFG)

Hedge fund activity in First Niagara Financial Group Inc. (NASDAQ:FNFG)

At the end of the second quarter, a total of 18 of the hedge funds we track were long in this stock, a change of -5% from the first quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes substantially.

According to our 13F database, Dreman Value Management, managed by David Dreman, holds the most valuable position in First Niagara Financial Group Inc. (NASDAQ:FNFG). Dreman Value Management has a $26.1 million position in the stock, comprising 0.8% of its 13F portfolio. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $17.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Anand Parekh’s Alyeska Investment Group, Ric Dillon’s Diamond Hill Capital and Israel Englander’s Millennium Management.

Since First Niagara Financial Group Inc. (NASDAQ:FNFG) has faced a fall in interest from the entirety of the hedge funds we track, we can see that there exists a select few hedgies who were dropping their full holdings in Q1. Interestingly, Neil Chriss’s Hutchin Hill Capital dumped the biggest investment of the 450+ funds we monitor, valued at an estimated $13.1 million in stock, and Daniel S. Och of OZ Management was right behind this move, as the fund dropped about $12.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 1 funds in Q1.

How have insiders been trading First Niagara Financial Group Inc. (NASDAQ:FNFG)?

Insider buying made by high-level executives is at its handiest when the company in focus has experienced transactions within the past six months. Over the latest six-month time frame, First Niagara Financial Group Inc. (NASDAQ:FNFG) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll go over the relationship between both of these indicators in other stocks similar to First Niagara Financial Group Inc. (NASDAQ:FNFG). These stocks are Washington Federal Inc. (NASDAQ:WAFD), Ocwen Financial Corporation (NYSE:OCN), Hudson City Bancorp, Inc. (NASDAQ:HCBK), People’s United Financial, Inc. (NASDAQ:PBCT), and Investors Bancorp, Inc. (NASDAQ:ISBC). This group of stocks belong to the savings & loans industry and their market caps are similar to FNFG’s market cap.

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