Is First Merchants Corporation (FRME) Going to Burn These Hedge Funds?

Seeing as First Merchants Corporation (NASDAQ:FRME) has witnessed falling interest from hedge fund managers, we can see that there is a sect of funds who were dropping their full holdings by the end of the third quarter. It’s worth mentioning that Israel Englander’s Millennium Management sold off the largest investment of the 700 funds monitored by Insider Monkey, worth about $5.4 million in stock, and Robert B. Gillam’s McKinley Capital Management was right behind this move, as the fund dumped about $3.3 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 6 funds by the end of the third quarter.

Let’s now take a look at hedge fund activity in other stocks similar to First Merchants Corporation (NASDAQ:FRME). We will take a look at Rogers Corporation (NYSE:ROG), Boise Cascade Co (NYSE:BCC), Semtech Corporation (NASDAQ:SMTC), and II-VI, Inc. (NASDAQ:IIVI). This group of stocks’ market caps are closest to FRME’s market cap.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $78 million. That figure was $71 million in FRME’s case. Boise Cascade Co (NYSE:BCC) is the most popular stock in this table. On the other hand Semtech Corporation (NASDAQ:SMTC) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks First Merchants Corporation (NASDAQ:FRME) is even less popular than SMTC. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.