In this article we will take a look at whether hedge funds think First Horizon National Corporation (NYSE:FHN) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is First Horizon National Corporation (NYSE:FHN) worth your attention right now? Money managers are becoming more confident. The number of long hedge fund positions inched up by 4 in recent months. Our calculations also showed that FHN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 51 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a peek at the new hedge fund action encompassing First Horizon National Corporation (NYSE:FHN).
Hedge fund activity in First Horizon National Corporation (NYSE:FHN)
Heading into the second quarter of 2020, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FHN over the last 18 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
The largest stake in First Horizon National Corporation (NYSE:FHN) was held by Citadel Investment Group, which reported holding $87.4 million worth of stock at the end of September. It was followed by Carlson Capital with a $31 million position. Other investors bullish on the company included Arrowstreet Capital, Balyasny Asset Management, and Azora Capital. In terms of the portfolio weights assigned to each position Azora Capital allocated the biggest weight to First Horizon National Corporation (NYSE:FHN), around 7.68% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, setting aside 2.46 percent of its 13F equity portfolio to FHN.
Consequently, specific money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most valuable position in First Horizon National Corporation (NYSE:FHN). Arrowstreet Capital had $20.4 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $20.2 million position during the quarter. The other funds with brand new FHN positions are Ravi Chopra’s Azora Capital, Anton Schutz’s Mendon Capital Advisors, and Greg Eisner’s Engineers Gate Manager.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as First Horizon National Corporation (NYSE:FHN) but similarly valued. These stocks are MasTec, Inc. (NYSE:MTZ), AutoNation, Inc. (NYSE:AN), Avnet, Inc. (NYSE:AVT), and Werner Enterprises, Inc. (NASDAQ:WERN). This group of stocks’ market values are closest to FHN’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $243 million. That figure was $243 million in FHN’s case. AutoNation, Inc. (NYSE:AN) is the most popular stock in this table. On the other hand Werner Enterprises, Inc. (NASDAQ:WERN) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks First Horizon National Corporation (NYSE:FHN) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May and still beat the market by 13.2 percentage points. Unfortunately FHN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on FHN were disappointed as the stock returned 16% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.