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 Regions Financial Corporation (NYSE:RF).
Regions Financial Corporation (NYSE:RF) was in 32 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 47. RF has seen an increase in hedge fund sentiment of late. There were 26 hedge funds in our database with RF holdings at the end of December. Our calculations also showed that RF isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to review the key hedge fund action regarding Regions Financial Corporation (NYSE:RF).
Do Hedge Funds Think RF Is A Good Stock To Buy Now?
At Q1’s end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 23% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in RF over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Regions Financial Corporation (NYSE:RF) was held by Millennium Management, which reported holding $82 million worth of stock at the end of December. It was followed by Pzena Investment Management with a $79.2 million position. Other investors bullish on the company included Two Sigma Advisors, Citadel Investment Group, and Forest Hill Capital. In terms of the portfolio weights assigned to each position Forest Hill Capital allocated the biggest weight to Regions Financial Corporation (NYSE:RF), around 3.19% of its 13F portfolio. Elizabeth Park Capital Management is also relatively very bullish on the stock, designating 0.45 percent of its 13F equity portfolio to RF.
As aggregate interest increased, key hedge funds were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the biggest position in Regions Financial Corporation (NYSE:RF). Marshall Wace LLP had $10 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $3.4 million investment in the stock during the quarter. The following funds were also among the new RF investors: Qing Li’s Sciencast Management, Israel Englander’s Millennium Management, and Jinghua Yan’s TwinBeech Capital.
Let’s now review hedge fund activity in other stocks similar to Regions Financial Corporation (NYSE:RF). These stocks are Burlington Stores Inc (NYSE:BURL), Dover Corporation (NYSE:DOV), 10x Genomics, Inc. (NASDAQ:TXG), Discovery Inc. (NASDAQ:DISCA), Trimble Inc. (NASDAQ:TRMB), M&T Bank Corporation (NYSE:MTB), and Teleflex Incorporated (NYSE:TFX). This group of stocks’ market values match RF’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.6 hedge funds with bullish positions and the average amount invested in these stocks was $950 million. That figure was $272 million in RF’s case. Discovery Inc. (NASDAQ:DISCA) is the most popular stock in this table. On the other hand 10x Genomics, Inc. (NASDAQ:TXG) is the least popular one with only 23 bullish hedge fund positions. Regions Financial Corporation (NYSE:RF) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for RF is 48.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and beat the market again by 6 percentage points. Unfortunately RF wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on RF were disappointed as the stock returned -1.3% since the end of March (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.