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Here is What Hedge Funds Think About Fifth Third Bancorp (FITB)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Fifth Third Bancorp (NASDAQ:FITB).

Is Fifth Third Bancorp (NASDAQ:FITB) a marvelous investment right now? Hedge funds are becoming less hopeful. The number of bullish hedge fund bets fell by 11 lately. Our calculations also showed that FITB 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). FITB was in 30 hedge funds’ portfolios at the end of March. There were 41 hedge funds in our database with FITB positions at the end of the previous quarter.

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

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 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.

Richard Pzena - Pzena Investment Management

Richard S. Pzena of Pzena Investment Management

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 oneWe 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 let’s review the new hedge fund action regarding Fifth Third Bancorp (NASDAQ:FITB).

How are hedge funds trading Fifth Third Bancorp (NASDAQ:FITB)?

At Q1’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -27% from the previous quarter. On the other hand, there were a total of 38 hedge funds with a bullish position in FITB a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, AQR Capital Management held the most valuable stake in Fifth Third Bancorp (NASDAQ:FITB), which was worth $106.1 million at the end of the third quarter. On the second spot was Pzena Investment Management which amassed $78.2 million worth of shares. Arrowstreet Capital, Renaissance Technologies, and Adage Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Hourglass Capital allocated the biggest weight to Fifth Third Bancorp (NASDAQ:FITB), around 2.48% of its 13F portfolio. Fourthstone LLC is also relatively very bullish on the stock, designating 1.29 percent of its 13F equity portfolio to FITB.

Judging by the fact that Fifth Third Bancorp (NASDAQ:FITB) has experienced falling interest from hedge fund managers, we can see that there was a specific group of hedge funds that elected to cut their full holdings last quarter. At the top of the heap, Clint Carlson’s Carlson Capital sold off the biggest stake of the “upper crust” of funds followed by Insider Monkey, worth an estimated $38.9 million in stock, and Ravi Chopra’s Azora Capital was right behind this move, as the fund said goodbye to about $13.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 11 funds last quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Fifth Third Bancorp (NASDAQ:FITB) but similarly valued. These stocks are Brookfield Infrastructure Partners L.P. (NYSE:BIP), Jacobs Engineering Group Inc. (NYSE:J), KB Financial Group, Inc. (NYSE:KB), and IDEX Corporation (NYSE:IEX). All of these stocks’ market caps match FITB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BIP 14 55630 3
J 28 995596 -7
KB 7 37837 2
IEX 33 535440 10
Average 20.5 406126 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $406 million. That figure was $384 million in FITB’s case. IDEX Corporation (NYSE:IEX) is the most popular stock in this table. On the other hand KB Financial Group, Inc. (NYSE:KB) is the least popular one with only 7 bullish hedge fund positions. Fifth Third Bancorp (NASDAQ:FITB) is not the most popular stock in this group but hedge fund interest is still above average. 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 but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on FITB as the stock returned 30.6% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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