Is First Defiance Financial Corp. (FDEF) A Good Stock To Buy?

At Insider Monkey we follow nearly 750 of the best-performing investors and even though many of them lost money in the last couple of months of 2018 (some actually delivered very strong returns), the history teaches us that over the long-run they still manage to beat the market, which is why it can be profitable for us to imitate their activity. Of course, even the best money managers can sometimes get it wrong, but following some of their picks gives us a better chance to outperform the crowd than picking a random stock and this is where our research comes in.

First Defiance Financial Corp. (NASDAQ:FDEF) shareholders have witnessed a decrease in support from the world’s most elite money managers recently. Our calculations also showed that fdef isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are plenty of methods shareholders put to use to analyze their stock investments. Some of the most useful methods are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can outpace their index-focused peers by a superb margin (see the details here).


Cliff Asness of AQR Capital Management

We’re going to analyze the latest hedge fund action surrounding First Defiance Financial Corp. (NASDAQ:FDEF).

What does the smart money think about First Defiance Financial Corp. (NASDAQ:FDEF)?

Heading into the first quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards FDEF over the last 14 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with FDEF Positions

Among these funds, Renaissance Technologies held the most valuable stake in First Defiance Financial Corp. (NASDAQ:FDEF), which was worth $19.8 million at the end of the fourth quarter. On the second spot was AQR Capital Management which amassed $4.6 million worth of shares. Moreover, Millennium Management, Two Sigma Advisors, and Bailard Inc were also bullish on First Defiance Financial Corp. (NASDAQ:FDEF), allocating a large percentage of their portfolios to this stock.

Because First Defiance Financial Corp. (NASDAQ:FDEF) has witnessed declining sentiment from hedge fund managers, we can see that there is a sect of hedgies that decided to sell off their positions entirely last quarter. At the top of the heap, Ken Griffin’s Citadel Investment Group said goodbye to the largest stake of the “upper crust” of funds watched by Insider Monkey, worth close to $0.4 million in stock, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital was right behind this move, as the fund cut about $0 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 1 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as First Defiance Financial Corp. (NASDAQ:FDEF) but similarly valued. We will take a look at Independent Bank Corporation (NASDAQ:IBCP), RadNet Inc. (NASDAQ:RDNT), Ascena Retail Group Inc (NASDAQ:ASNA), and Teekay Offshore Partners L.P. (NYSE:TOO). This group of stocks’ market values are similar to FDEF’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IBCP 11 50167 1
RDNT 14 72131 3
ASNA 16 78044 -5
TOO 8 13953 1
Average 12.25 53574 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $28 million in FDEF’s case. Ascena Retail Group Inc (NASDAQ:ASNA) is the most popular stock in this table. On the other hand Teekay Offshore Partners L.P. (NYSE:TOO) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks First Defiance Financial Corp. (NASDAQ:FDEF) is even less popular than TOO. Hedge funds dodged a bullet by taking a bearish stance towards FDEF. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately FDEF wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); FDEF investors were disappointed as the stock returned 16% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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