Is First American Financial Corp (FAF) Going to Burn These Hedge Funds?

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Due to the fact that First American Financial Corp (NYSE:FAF) has experienced flat sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few hedge funds who sold off their entire stakes heading into Q4. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management said goodbye to the biggest investment of all the hedgies tracked by Insider Monkey, valued at about $14.2 million in stock. Clint Carlson’s fund, Carlson Capital, also dropped its stock, about $8.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to First American Financial Corp (NYSE:FAF). These stocks are Jones Lang LaSalle Inc (NYSE:JLL), Graco Inc. (NYSE:GGG), AMC Networks Inc (NASDAQ:AMCX), and Booz Allen Hamilton Holding Corporation (NYSE:BAH). This group of stocks’ market values are similar to FAF’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
JLL 24 798501 -3
GGG 12 154364 1
AMCX 28 344024 4
BAH 23 290165 -4

As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $397 million. That figure was $430 million in FAF’s case. AMC Networks Inc (NASDAQ:AMCX) is the most popular stock in this table. On the other hand Graco Inc. (NYSE:GGG) is the least popular one with only 12 bullish hedge fund positions. First American Financial Corp (NYSE:FAF) 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. In this regard AMCX might be a better candidate to consider a long position.

Disclosure: None

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