Is Regions Financial Corporation (NYSE:RF) a worthy stock to buy now? The smart money is taking a bearish view. The number of long hedge fund positions dropped by 6 lately.
According to most investors, hedge funds are perceived as underperforming, old financial vehicles of the past. While there are greater than 8000 funds in operation today, we at Insider Monkey look at the elite of this group, about 450 funds. It is estimated that this group controls the majority of all hedge funds’ total capital, and by watching their highest performing picks, we have identified a number of investment strategies that have historically beaten Mr. Market. 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 23.3 percentage points in 8 months (explore the details and some picks here).
Equally as important, optimistic insider trading sentiment is another way to parse down the marketplace. There are plenty of incentives for an executive to drop shares of his or her company, but just one, very clear reason why they would buy. Several empirical studies have demonstrated the useful potential of this method if shareholders understand where to look (learn more here).
With all of this in mind, it’s important to take a glance at the recent action surrounding Regions Financial Corporation (NYSE:RF).
How have hedgies been trading Regions Financial Corporation (NYSE:RF)?
In preparation for this quarter, a total of 37 of the hedge funds we track held long positions in this stock, a change of -14% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings substantially.
According to our comprehensive database, Citadel Investment Group, managed by Ken Griffin, holds the largest position in Regions Financial Corporation (NYSE:RF). Citadel Investment Group has a $172.8 million position in the stock, comprising 0.3% of its 13F portfolio. The second largest stake is held by Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $107.2 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Other hedgies that hold long positions include Phill Gross and Robert Atchinson’s Adage Capital Management, Israel Englander’s Millennium Management and Ryan Heslop and Ariel Warszawski’s Firefly Value Partners.
Because Regions Financial Corporation (NYSE:RF) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there were a few funds that elected to cut their positions entirely in Q1. Intriguingly, David Gallo’s Valinor Management LLC said goodbye to the biggest position of the “upper crust” of funds we track, worth about $54.8 million in stock.. Louis Bacon’s fund, Moore Global Investments, also cut its stock, about $20.5 million worth. These transactions are interesting, as total hedge fund interest dropped by 6 funds in Q1.
What do corporate executives and insiders think about Regions Financial Corporation (NYSE:RF)?
Insider buying is particularly usable when the company we’re looking at has experienced transactions within the past 180 days. Over the last half-year time frame, Regions Financial Corporation (NYSE:RF) has seen zero unique insiders purchasing, and 4 insider sales (see the details of insider trades here).
Let’s go over hedge fund and insider activity in other stocks similar to Regions Financial Corporation (NYSE:RF). These stocks are Trustmark Corp (NASDAQ:TRMK), F.N.B. Corp (NYSE:FNB), EverBank Financial Corp (NYSE:EVER), First Horizon National Corporation (NYSE:FHN), and Hancock Holding Company (NASDAQ:HBHC). This group of stocks are in the regional – southeast banks industry and their market caps are closest to RF’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Trustmark Corp (NASDAQ:TRMK) | 6 | 0 | 3 |
| F.N.B. Corp (NYSE:FNB) | 4 | 0 | 3 |
| EverBank Financial Corp (NYSE:EVER) | 10 | 0 | 11 |
| First Horizon National Corporation (NYSE:FHN) | 11 | 0 | 2 |
| Hancock Holding Company (NASDAQ:HBHC) | 11 | 1 | 3 |
With the returns exhibited by Insider Monkey’s studies, retail investors should always watch hedge fund and insider trading sentiment, and Regions Financial Corporation (NYSE:RF) is an important part of this process.
