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Hedge Funds Are Selling First Horizon National Corporation (FHN)

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was First Horizon National Corporation (NYSE:FHN).

First Horizon National Corporation (NYSE:FHN) investors should be aware of a decrease in hedge fund sentiment lately. Our calculations also showed that FHN isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Joe Huber - Huber Capital Management

We’re going to take a gander at the recent hedge fund action encompassing First Horizon National Corporation (NYSE:FHN).

How have hedgies been trading First Horizon National Corporation (NYSE:FHN)?

Heading into the fourth quarter of 2018, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from one quarter earlier. On the other hand, there were a total of 24 hedge funds with a bullish position in FHN at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

FHN_dec2018

Among these funds, EJF Capital held the most valuable stake in First Horizon National Corporation (NYSE:FHN), which was worth $63.1 million at the end of the third quarter. On the second spot was Huber Capital Management which amassed $35.5 million worth of shares. Moreover, Diamond Hill Capital, Forest Hill Capital, and Gillson Capital were also bullish on First Horizon National Corporation (NYSE:FHN), allocating a large percentage of their portfolios to this stock.

Due to the fact that First Horizon National Corporation (NYSE:FHN) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedge funds that slashed their positions entirely heading into Q3. Interestingly, Jim Simons’s Renaissance Technologies said goodbye to the biggest investment of the “upper crust” of funds watched by Insider Monkey, comprising close to $27.6 million in stock, and Steve Cohen’s Point72 Asset Management was right behind this move, as the fund cut about $26.9 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds heading into Q3.

Let’s go over hedge fund activity in other stocks similar to First Horizon National Corporation (NYSE:FHN). These stocks are Integra Lifesciences Holdings Corp (NASDAQ:IART), Wix.Com Ltd (NASDAQ:WIX), Globus Medical Inc (NYSE:GMED), and Manpowergroup Inc (NYSE:MAN). This group of stocks’ market valuations are closest to FHN’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IART 14 188907 -3
WIX 24 933542 -3
GMED 19 318800 5
MAN 28 591849 -2
Average 21.25 508275 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $508 million. That figure was $183 million in FHN’s case. Manpowergroup Inc (NYSE:MAN) is the most popular stock in this table. On the other hand Integra Lifesciences Holdings Corp (NASDAQ:IART) is the least popular one with only 14 bullish hedge fund positions. First Horizon National Corporation (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 MAN might be a better candidate to consider a long position.

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

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