Do Hedge Funds and Insiders Love Firstmerit Corp (FMER)?

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Is it smart to be bullish on Firstmerit Corp (NASDAQ:FMER)?

In the eyes of many market players, hedge funds are perceived as bloated, old financial vehicles of a forgotten age. Although there are more than 8,000 hedge funds with their doors open today, Insider Monkey looks at the moguls of this group, close to 525 funds. It is widely held that this group controls the lion’s share of all hedge funds’ total assets, and by keeping an eye on their best equity investments, we’ve found a few investment strategies that have historically outstripped Mr. Market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 33 percentage points in 11 months (find the details here).

Just as useful, optimistic insider trading sentiment is a second way to look at the investments you’re interested in. Obviously, there are lots of reasons for an upper level exec to drop shares of his or her company, but just one, very simple reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this strategy if shareholders know what to do (learn more here).

Furthermore, it’s important to examine the recent info about Firstmerit Corp (NASDAQ:FMER).

How have hedgies been trading Firstmerit Corp (NASDAQ:FMER)?

At Q2’s end, a total of 13 of the hedge funds we track held long positions in this stock, a change of 30% from the first quarter. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings significantly.

Firstmerit Corp (NASDAQ:FMER)Out of the hedge funds we follow, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in Firstmerit Corp (NASDAQ:FMER). Fisher Asset Management has a $66.7 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is David Dreman of Dreman Value Management, with a $35.3 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Some other hedge funds with similar optimism include Ken Gray and Steve Walsh’s Bryn Mawr Capital, Chuck Royce’s Royce & Associates and Ken Griffin’s Citadel Investment Group.

As industrywide interest increased, specific money managers have been driving this bullishness. Fisher Asset Management, managed by Ken Fisher, established the largest position in Firstmerit Corp (NASDAQ:FMER). Fisher Asset Management had 66.7 million invested in the company at the end of the quarter. David Dreman’s Dreman Value Management also initiated a $35.3 million position during the quarter. The other funds with brand new FMER positions are Ken Gray and Steve Walsh’s Bryn Mawr Capital, Chuck Royce’s Royce & Associates, and Ken Griffin’s Citadel Investment Group.

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

Legal insider trading, particularly when it’s bullish, is at its handiest when the company we’re looking at has seen transactions within the past 180 days. Over the last half-year time frame, Firstmerit Corp (NASDAQ:FMER) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators 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 regionalmidwest banks industry and their market caps are similar to FMER’s market cap.

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