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

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at First Merchants Corporation (NASDAQ:FRME) from the perspective of those elite funds.

Is First Merchants Corporation (NASDAQ:FRME) an excellent investment today? Prominent investors are reducing their bets on the stock. The number of bullish hedge fund positions were trimmed by 6 recently. FRME was in 8 hedge funds’ portfolios at the end of the third quarter of 2015. There were 14 hedge funds in our database with FRME holdings at the end of the previous quarter. At the end of this article we will also compare FRME to other stocks including Rogers Corporation (NYSE:ROG), Boise Cascade Co (NYSE:BCC), and Semtech Corporation (NASDAQ:SMTC) to get a better sense of its popularity.

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Keeping this in mind, let’s view the fresh action regarding First Merchants Corporation (NASDAQ:FRME).

Hedge fund activity in First Merchants Corporation (NASDAQ:FRME)

At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -43% from the second quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Robert I. Usdan and Wayne K. Goldstein’s Endicott Management has the biggest position in First Merchants Corporation (NASDAQ:FRME), worth close to $37 million, corresponding to 13.7% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, managed by Jim Simons, which holds an $19.9 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other peers with similar optimism encompass Paul Magidson, Jonathan Cohen. And Ostrom Enders’s Castine Capital Management, Ken Fisher’s Fisher Asset Management and D. E. Shaw’s D E Shaw.