“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards First Interstate Bancsystem Inc (NASDAQ:FIBK).
Is First Interstate Bancsystem Inc (NASDAQ:FIBK) a buy, sell, or hold? The best stock pickers are becoming less confident. The number of long hedge fund positions retreated by 2 in recent months. Our calculations also showed that fibk isn’t among the 30 most popular stocks among hedge funds. FIBK was in 11 hedge funds’ portfolios at the end of the first quarter of 2019. There were 13 hedge funds in our database with FIBK holdings at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a look at the new hedge fund action surrounding First Interstate Bancsystem Inc (NASDAQ:FIBK).
How are hedge funds trading First Interstate Bancsystem Inc (NASDAQ:FIBK)?
Heading into the second quarter of 2019, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards FIBK over the last 15 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Israel Englander’s Millennium Management has the number one position in First Interstate Bancsystem Inc (NASDAQ:FIBK), worth close to $29.1 million, amounting to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, led by Ken Griffin, holding a $25.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism include Jim Simons’s Renaissance Technologies, Anton Schutz’s Mendon Capital Advisors and Dmitry Balyasny’s Balyasny Asset Management.
Seeing as First Interstate Bancsystem Inc (NASDAQ:FIBK) has faced declining sentiment from the aggregate hedge fund industry, we can see that there were a few fund managers that decided to sell off their full holdings by the end of the third quarter. It’s worth mentioning that Minhua Zhang’s Weld Capital Management dumped the largest position of the “upper crust” of funds monitored by Insider Monkey, totaling close to $0.5 million in stock, and David Costen Haley’s HBK Investments was right behind this move, as the fund said goodbye to about $0.3 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as First Interstate Bancsystem Inc (NASDAQ:FIBK) but similarly valued. These stocks are Cadence Bancorporation (NYSE:CADE), Vonage Holdings Corp. (NYSE:VG), ABM Industries, Inc. (NYSE:ABM), and The Hain Celestial Group, Inc. (NASDAQ:HAIN). This group of stocks’ market valuations match FIBK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CADE | 22 | 145431 | 4 |
| VG | 34 | 259024 | 12 |
| ABM | 8 | 22434 | -4 |
| HAIN | 13 | 492321 | -8 |
| Average | 19.25 | 229803 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $230 million. That figure was $94 million in FIBK’s case. Vonage Holdings Corp. (NYSE:VG) is the most popular stock in this table. On the other hand ABM Industries, Inc. (NYSE:ABM) is the least popular one with only 8 bullish hedge fund positions. First Interstate Bancsystem Inc (NASDAQ:FIBK) 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 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately FIBK wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); FIBK investors were disappointed as the stock returned -0.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
