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Hedge Funds Are Selling First Horizon National Corp (FHN)

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in First Horizon National Corp (NYSE:FHN) .

First Horizon National Corp (NYSE:FHN) investors should pay attention to a decrease in support from the world’s most successful money managers lately. 17 hedge funds that we track were long the stock on September 30. There were 20 hedge funds in our database with FHN positions at the end of the previous quarter. At the end of this article we will also compare FHN to other stocks including Huntsman Corporation (NYSE:HUN), John Wiley & Sons Inc (NYSE:JW), and BankUnited (NYSE:BKU) to get a better sense of its popularity.

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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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How are hedge funds trading First Horizon National Corp (NYSE:FHN)?

At Q3’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a 15% drop from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in FHN heading into this year, so sentiment is still up overall. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
FHN
Of the funds tracked by Insider Monkey, Israel Englander’s Millennium Management has the largest position in First Horizon National Corp (NYSE:FHN), worth close to $85.3 million. The second largest stake is held by Ric Dillon of Diamond Hill Capital, with a $55.6 million position. Other hedge funds and institutional investors with similar optimism include Joe Huber’s Huber Capital Management, Ken Griffin’s Citadel Investment Group, and David E. Shaw’s D E Shaw. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

We already know that not all hedge funds are bullish on the stock and some hedge funds actually cashed in their positions entirely. Interestingly, Sharif Siddiqui’s Alpenglow Capital cashed in the biggest position of all the hedgies followed by Insider Monkey, worth about $7.7 million in stock, and Anton Schutz’s Mendon Capital Advisors was right behind this move, as the fund dropped about $3.4 million worth of shares.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as First Horizon National Corp (NYSE:FHN) but similarly valued. We will take a look at Huntsman Corporation (NYSE:HUN), John Wiley & Sons Inc (NYSE:JW), BankUnited (NYSE:BKU), and Spirit Airlines Incorporated (NASDAQ:SAVE). All of these stocks’ market caps resemble FHN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HUN 42 563476 4
JW 12 80638 -2
BKU 15 332080 -2
SAVE 30 338110 8

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $329 million. That figure was $262 million in FHN’s case. Huntsman Corporation (NYSE:HUN) is the most popular stock in this table. On the other hand John Wiley & Sons Inc (NYSE:JW) is the least popular one with only 12 bullish hedge fund positions. First Horizon National Corp (NYSE:FHN) 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. In this regard HUN might be a better candidate to consider taking a long position in.

Disclosure: None

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