Should You Avoid FBR & Co (FBRC)?

Seeing as FBR & Co (NASDAQ:FBRC) has experienced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of money managers that slashed their entire stakes in the third quarter. It’s worth mentioning that Jim Simons’s Renaissance Technologies dumped the largest stake of the 700 funds watched by Insider Monkey, comprising an estimated $0.6 million in stock. Cliff Asness’s fund, AQR Capital Management, also dumped its stock, about $0.3 million worth of FBRC shares. These moves are interesting, as total hedge fund interest was cut by 2 funds in the third quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as FBR & Co (NASDAQ:FBRC) but similarly valued. These stocks are Sientra Inc (NASDAQ:SIEN), GSV Capital Corp (NASDAQ:GSVC), Five Star Quality Care, Inc. (NYSE:FVE), and Exa Corp (NASDAQ:EXA). All of these stocks’ market caps match FBRC’s market cap.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $11 million in FBRC’s case. Five Star Quality Care, Inc. (NYSE:FVE) is the most popular stock in this table. On the other hand FBR & Co (NASDAQ:FBRC) and GSV Capital Corp (NASDAQ:GSVC) linger behind, with only 6 bullish hedge fund positions. 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.