Hedge Funds Are Nibbling On FedNat Holding Co (FNHC)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of FedNat Holding Co (NASDAQ:FNHC) based on that data.

Is FedNat Holding Co (NASDAQ:FNHC) worth your attention right now? The smart money is getting more bullish. The number of bullish hedge fund bets inched up by 1 recently. Our calculations also showed that FNHC 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). FNHC was in 7 hedge funds’ portfolios at the end of March. There were 6 hedge funds in our database with FNHC positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are dozens of formulas market participants use to analyze their stock investments. Some of the most useful formulas are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can beat the market by a solid margin (see the details here).

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

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 stocks recommended/scorned by legendary Bill Miller. 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. Now let’s take a glance at the recent hedge fund action encompassing FedNat Holding Co (NASDAQ:FNHC).

How are hedge funds trading FedNat Holding Co (NASDAQ:FNHC)?

At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FNHC over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is FNHC A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Jim Simons (founder)’s Renaissance Technologies has the number one position in FedNat Holding Co (NASDAQ:FNHC), worth close to $8.5 million, accounting for less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Ron Bobman of Capital Returns Management, with a $1.6 million position; the fund has 4.2% of its 13F portfolio invested in the stock. Other peers that hold long positions comprise Noam Gottesman’s GLG Partners, John Overdeck and David Siegel’s Two Sigma Advisors and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Capital Returns Management allocated the biggest weight to FedNat Holding Co (NASDAQ:FNHC), around 4.18% of its 13F portfolio. Bailard Inc is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to FNHC.

With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. D E Shaw, managed by D. E. Shaw, created the biggest position in FedNat Holding Co (NASDAQ:FNHC). D E Shaw had $0.2 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as FedNat Holding Co (NASDAQ:FNHC) but similarly valued. These stocks are Fidus Investment Corp (NASDAQ:FDUS), Agile Therapeutics Inc (NASDAQ:AGRX), Clearfield, Inc. (NASDAQ:CLFD), and GSI Technology, Inc. (NASDAQ:GSIT). This group of stocks’ market valuations match FNHC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FDUS 8 3314 2
AGRX 15 38935 3
CLFD 3 8200 -1
GSIT 6 14193 1
Average 8 16161 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $12 million in FNHC’s case. Agile Therapeutics Inc (NASDAQ:AGRX) is the most popular stock in this table. On the other hand Clearfield, Inc. (NASDAQ:CLFD) is the least popular one with only 3 bullish hedge fund positions. FedNat Holding Co (NASDAQ:FNHC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately FNHC wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); FNHC investors were disappointed as the stock returned 10.4% during the second quarter 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.

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