Is Financial Institutions, Inc. (FISI) A Good Stock To Buy ?

“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 Financial Institutions, Inc. (NASDAQ:FISI).

Is Financial Institutions, Inc. (NASDAQ:FISI) a buy here? Prominent investors are in an optimistic mood. The number of bullish hedge fund positions inched up by 1 lately. Our calculations also showed that fisi isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of signals market participants can use to assess their stock investments. A couple of the most useful signals are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can trounce the market by a solid amount (see the details here).

Noam Gottesman GLG Partners

Noam Gottesman, GLG Partners

Let’s take a look at the fresh hedge fund action surrounding Financial Institutions, Inc. (NASDAQ:FISI).

How have hedgies been trading Financial Institutions, Inc. (NASDAQ:FISI)?

At the end of the first quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards FISI over the last 15 quarters. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

No of Hedge Funds with FISI Positions

Among these funds, Royce & Associates held the most valuable stake in Financial Institutions, Inc. (NASDAQ:FISI), which was worth $13.2 million at the end of the first quarter. On the second spot was Renaissance Technologies which amassed $12 million worth of shares. Moreover, GLG Partners, AQR Capital Management, and Millennium Management were also bullish on Financial Institutions, Inc. (NASDAQ:FISI), allocating a large percentage of their portfolios to this stock.

Consequently, some big names have jumped into Financial Institutions, Inc. (NASDAQ:FISI) headfirst. Citadel Investment Group, managed by Ken Griffin, created the most valuable position in Financial Institutions, Inc. (NASDAQ:FISI). Citadel Investment Group had $0.2 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Financial Institutions, Inc. (NASDAQ:FISI) but similarly valued. These stocks are Tower International Inc (NYSE:TOWR), Diplomat Pharmacy Inc (NYSE:DPLO), Golden Star Resources Ltd. (NYSE:GSS), and Global Indemnity Limited (NASDAQ:GBLI). This group of stocks’ market valuations match FISI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TOWR 13 41821 -3
DPLO 14 85694 4
GSS 3 10870 -1
GBLI 6 35423 1
Average 9 43452 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $40 million in FISI’s case. Diplomat Pharmacy Inc (NYSE:DPLO) is the most popular stock in this table. On the other hand Golden Star Resources Ltd. (NYSE:GSS) is the least popular one with only 3 bullish hedge fund positions. Financial Institutions, Inc. (NASDAQ:FISI) is not the most popular stock in this group but hedge fund interest is still above average. 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 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 FISI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on FISI were disappointed as the stock returned 1.5% during the same 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.