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Firstmerit Corp (FMER): Hedge Funds Are Bearish and Insiders Are Bullish, What Should You Do?

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Firstmerit Corp (NASDAQ:FMER) has seen a decrease in hedge fund interest in recent months.

According to most stock holders, hedge funds are seen as worthless, old financial tools of yesteryear. While there are greater than 8000 funds in operation at present, we look at the bigwigs of this club, about 450 funds. It is widely believed that this group has its hands on the lion’s share of all hedge funds’ total capital, and by watching their top stock picks, we have unsheathed a number of investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year 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 topped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as key, positive insider trading activity is another way to parse down the stock market universe. There are plenty of stimuli for an executive to cut shares of his or her company, but just one, very clear reason why they would initiate a purchase. Several empirical studies have demonstrated the market-beating potential of this method if investors understand where to look (learn more here).

Consequently, it’s important to take a look at the latest action surrounding Firstmerit Corp (NASDAQ:FMER).

What have hedge funds been doing with Firstmerit Corp (NASDAQ:FMER)?

At the end of the first quarter, a total of 10 of the hedge funds we track were long in this stock, a change of -23% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings substantially.

Firstmerit Corp (NASDAQ:FMER)According to our comprehensive database, Ken Fisher’s Fisher Asset Management had the largest position in Firstmerit Corp (NASDAQ:FMER), worth close to $47.4 million, accounting for 0.1% of its total 13F portfolio. Coming in second is David Dreman of Dreman Value Management, with a $34.9 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Remaining peers with similar optimism include Ken Griffin’s Citadel Investment Group, John Overdeck and David Siegel’s Two Sigma Advisors and Chuck Royce’s Royce & Associates.

Due to the fact that Firstmerit Corp (NASDAQ:FMER) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of fund managers that decided to sell off their positions entirely heading into Q2. Interestingly, Steven Cohen’s SAC Capital Advisors sold off the biggest position of the 450+ funds we key on, comprising an estimated $1.8 million in stock., and Anil Stevens and Glenn Shapiro of Parameter Capital Management was right behind this move, as the fund dumped about $1.4 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 3 funds heading into Q2.

What have insiders been doing with Firstmerit Corp (NASDAQ:FMER)?

Insider trading activity, especially when it’s bullish, is most useful when the company we’re looking at has experienced transactions within the past six months. Over the last half-year time frame, Firstmerit Corp (NASDAQ:FMER) has experienced 6 unique insiders buying, and 2 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Firstmerit Corp (NASDAQ:FMER). These stocks are Associated Banc Corp (NASDAQ:ASBC), MB Financial, Inc. (NASDAQ:MBFI), Wintrust Financial Corp (NASDAQ:WTFC), Old National Bancorp (NYSE:ONB), and PrivateBancorp Inc (NASDAQ:PVTB). This group of stocks are in the regional – midwest banks industry and their market caps are similar to FMER’s market cap.

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