First Merchants Corporation (FRME): Are Hedge Funds Right About This Stock?

Is First Merchants Corporation (NASDAQ:FRME) a buy, sell, or hold? The smart money is becoming less confident. The number of bullish hedge fund bets were trimmed by 1 lately.

First Merchants Corporation (NASDAQ:FRME)

In today’s marketplace, there are a multitude of methods shareholders can use to watch publicly traded companies. A duo of the best are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the best fund managers can trounce the market by a significant margin (see just how much).

Equally as important, optimistic insider trading sentiment is another way to break down the financial markets. Just as you’d expect, there are many reasons for an upper level exec to drop shares of his or her company, but only one, very clear reason why they would initiate a purchase. Various academic studies have demonstrated the valuable potential of this tactic if investors know what to do (learn more here).

With all of this in mind, it’s important to take a peek at the recent action encompassing First Merchants Corporation (NASDAQ:FRME).

Hedge fund activity in First Merchants Corporation (NASDAQ:FRME)

Heading into Q2, a total of 10 of the hedge funds we track held long positions in this stock, a change of -9% from the first quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were upping their holdings substantially.

When looking at the hedgies we track, Bryn Mawr Capital, managed by Ken Gray and Steve Walsh, holds the most valuable position in First Merchants Corporation (NASDAQ:FRME). Bryn Mawr Capital has a $9.1 million position in the stock, comprising 0.7% of its 13F portfolio. Coming in second is Renaissance Technologies, managed by Jim Simons, which held a $1.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedgies that are bullish include Robert B. Gillam’s McKinley Capital Management, Ken Griffin’s Citadel Investment Group and D. E. Shaw’s D E Shaw.

Since First Merchants Corporation (NASDAQ:FRME) has experienced a declination in interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedge funds that elected to cut their entire stakes last quarter. Interestingly, Mike Vranos’s Ellington sold off the biggest position of the 450+ funds we key on, totaling about $0.2 million in stock. These moves are interesting, as aggregate hedge fund interest was cut by 1 funds last quarter.

How are insiders trading First Merchants Corporation (NASDAQ:FRME)?

Insider buying is particularly usable when the company in focus has seen transactions within the past 180 days. Over the latest half-year time period, First Merchants Corporation (NASDAQ:FRME) has experienced 2 unique insiders buying, and 8 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to First Merchants Corporation (NASDAQ:FRME). These stocks are First Busey Corporation (NASDAQ:BUSE), Wilshire Bancorp Inc (NASDAQ:WIBC), First Financial Corp (NASDAQ:THFF), Taylor Capital Group Inc (NASDAQ:TAYC), and Lakeland Financial Corporation (NASDAQ:LKFN). All of these stocks are in the regional – midwest banks industry and their market caps are closest to FRME’s market cap.