First Niagara Financial Group Inc. (NASDAQ:FNFG) investors should pay attention to an increase in activity from the world's largest hedge funds of late.
According to most market participants, hedge funds are viewed as unimportant, old investment tools of the past. While there are more than 8000 funds with their doors open at present, we at Insider Monkey choose to focus on the crème de la crème of this club, close to 450 funds. It is widely believed that this group controls the lion's share of all hedge funds' total capital, and by paying attention to their highest performing picks, we have figured out a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy beat 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 outperformed the S&P 500 index by 24 percentage points in 7 months (see all of our picks from August).
Equally as integral, optimistic insider trading activity is another way to break down the stock market universe. There are plenty of incentives for an executive to drop shares of his or her company, but only one, very obvious reason why they would behave bullishly. Many empirical studies have demonstrated the useful potential of this strategy if shareholders understand what to do (learn more here).
Keeping this in mind, we're going to take a gander at the latest action surrounding First Niagara Financial Group Inc. (NASDAQ:FNFG).
At year's end, a total of 16 of the hedge funds we track were long in this stock, a change of 14% from the third quarter. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes substantially.
Of the funds we track, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in First Niagara Financial Group Inc. (NASDAQ:FNFG). Citadel Investment Group has a $38.9 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by David Dreman of Dreman Value Management, with a $24.2 million position; 0.7% of its 13F portfolio is allocated to the company. Remaining hedge funds that hold long positions include Ric Dillon's Diamond Hill Capital, Mario Gabelli's GAMCO Investors and Jim Simons's Renaissance Technologies.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into First Niagara Financial Group Inc. (NASDAQ:FNFG) headfirst. Dreman Value Management, managed by David Dreman, assembled the most valuable position in First Niagara Financial Group Inc. (NASDAQ:FNFG). Dreman Value Management had 24.2 million invested in the company at the end of the quarter. Steven Cohen's SAC Capital Advisors also initiated a $5 million position during the quarter. The other funds with brand new FNFG positions are Anil Stevens and Glenn Shapiro's Parameter Capital Management and Douglas W. Case's Advanced Investment Partners.
Insider purchases made by high-level executives is particularly usable when the company we're looking at has experienced transactions within the past 180 days. Over the latest six-month time period, First Niagara Financial Group Inc. (NASDAQ:FNFG) has seen 3 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let's also take a look at hedge fund and insider activity 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 closest to FNFG's market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Washington Federal Inc. (NASDAQ:WAFD)||16||0||0|
|Ocwen Financial Corporation (NYSE:OCN)||34||0||4|
|Hudson City Bancorp, Inc. (NASDAQ:HCBK)||22||0||0|
|People's United Financial, Inc. (NASDAQ:PBCT)||14||0||1|
|Investors Bancorp, Inc. (NASDAQ:ISBC)||7||1||1|
With the results shown by the aforementioned tactics, retail investors should always keep an eye on hedge fund and insider trading activity, and First Niagara Financial Group Inc. (NASDAQ:FNFG) shareholders fit into this picture quite nicely.