Evaluating Flagstar Financial’s (FLG) Recovery and Potential Growth

Black Bear Value Partners, an investment management firm, published its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. Black Bear Value Fund returned -3.0% in June and -10.5% in the quarter, and -11.7% YTD. The S&P 500 returned +5.1% June, +10.9% in the quarter, and +6.2% year-to-date. HFRI Value Index returned +3.1% in June, +7.7% in the quarter, and +7.1% year-to-date. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second quarter 2025 investor letter, Black Bear Value Partners highlighted stocks such as Flagstar Financial, Inc. (NYSE:FLG). Flagstar Financial, Inc. (NYSE:FLG) is a bank holding company for Flagstar Bank, N.A. The one-month return of Flagstar Financial, Inc. (NYSE:FLG) was 1.35%, and its shares gained 11.58% of their value over the last 52 weeks. On July 11, 2025, Flagstar Financial, Inc. (NYSE:FLG) stock closed at $11.27 per share with a market capitalization of $4.678 billion.

Black Bear Value Partners stated the following regarding Flagstar Financial, Inc. (NYSE:FLG) in its second quarter 2025 investor letter:

“Flagstar Financial, Inc. (NYSE:FLG)is the former New York Community Bank (a mashup of Flagstar Bank, New York Community Bank and assets from Signature Bank). Like our SHORT investments in Silicon Valley Bank and First Republic, FLG had a hole in their balance sheet (from soured multifamily and office real estate vs. long duration securities). That is where the similarities end.

FLG raised over $1BB in additional capital, led by former Treasury Secretary Steven Mnuchin. They revamped the management team and brought in a superstar CEO in Joseph Otting. They have reviewed nearly all the loans on the books, sold off non-core assets, raising additional capital and are focused on delivering a narrowly-focused, well-capitalized boring regional bank. In this case boring is good. Importantly, they have taken a conservative view of their loan book and a large credit reserve. This contrasts with several bank/private credit lenders we are short who have taken minimal reserves…” (Click here to read the full text)

A banker closely examining a document while seated at his desk.

Flagstar Financial, Inc. (NYSE:FLG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held Flagstar Financial, Inc. (NYSE:FLG) at the end of the first quarter, which was 35 in the previous quarter. While we acknowledge the risk and potential of FLG as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FLG and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.