Is First Merchants Corporation (FRME) Going to Burn These Hedge Funds?

As industrywide interest jumped, some big names were leading the bulls’ herd. Tudor Investment Corp, led by Paul Tudor Jones, created the most valuable position in First Merchants Corporation (NASDAQ:FRME). Tudor Investment Corp had $0.3 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.2 million position during the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as First Merchants Corporation (NASDAQ:FRME) but similarly valued. These stocks are Tronox Ltd (NYSE:TROX), Redwood Trust, Inc. (NYSE:RWT), Ascena Retail Group Inc (NASDAQ:ASNA), and Caleres Inc (NYSE:CAL). This group of stocks’ market caps match FRME’s market cap.

As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $131 million. That figure was $45 million in FRME’s case. Ascena Retail Group Inc (NASDAQ:ASNA) is the most popular stock in this table. On the other hand Redwood Trust, Inc. (NYSE:RWT) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks First Merchants Corporation (NASDAQ:FRME) is as less popular than RWT. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

Disclosure: None